Thinking outside the box in these testing times

Glory comes not only for inventors but also for innovators. The monetary policy committee has decided to keep the rates unchanged, but use targeted funding for growth revival in some key sectors that have both backward and forward linkages with growth. The targeted funding of specified sectors under the targeted longer-term refinancing operations is a good move, as risk aversion and uncertainty has made lending decision challenging. The extension of the held-to-maturity arrangement at 22% of net demand and time liabilities till March 2022 is also a good move from both banks’ and governments’ point of view. It also decided, as a countercyclical measure, to rationalize the risk weights by linking them only with loan-to-value ratios for all new housing loans sanctioned up to 31 March 2022.