Impact of Surprise RBI Policy on Stock Market

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On Wednesday 5th of May, 2021 RBI Governor Shaktikanta Das announced a certain policy for the easing of economic stress especially on the pharma and health care side caused due to the second wave of Covid-19 Pandemic. What were the announcements by the RBI Governor and how it will impact the stock market? Read this blog to get to know about this policy and its impact on the stock market.

Introduction:

RBI Governor Shaktikanta Das on Wednesday 5th of May 2021 announced several policies and measures to smoothify the stress-causing on the economy due to the second wave of the Covid-19 Pandemic.  What are these policies? Let’s understand in this summarized form.

RBI Policy:

For Pharma & Healthcare Sector:
  • The major highlight of this policy was the announcement of the Term Liquidity Facility by the RBI Governor.
  • RBI Governor Shantikanta Das came up with a Liquidity Window of around Rs. 50,000 Cr. for access to emergency health security with a tenure of 3 years and the same will be available at the repo rate. This window will be opened till 31st March 2022.
  • Under the scheme, banks can support entities including vaccine manufacturers, medical facilities, hospitals, and also patients.
For Individuals & MSMEs:
  • RBI has also allowed a further one-time restructuring of loans for Individuals & MSMEs till 30th September 2021. This facility will be applicable for the borrowers who have taken a loan of up to Rs. 25 Cr.
  • These individual and MSMEs borrowers should have been standard as of March 31, 2021.

G-SAP 1.0:

Also, RBI Governor Shantikanta Das has finalized to proceed with the purchase of G-Sec worth Rs. 35,000 Cr. under its G-SAP 1.0 on May 20, 201.

Small Finance Banks:

  • Further, RBI announced special long-term Repo Operations for Small Finance Banks (SFBs) of Rs. 10,000 Cr. at the repo rate for SFBs.
  • Under these operations, SFBs will be able to extend their helping hand to micro, small, and other unorganized sector entities. Also, they will be able to fund Small Microfinance Institutions (MFIs) having an asset size of Rs. 500 Cr.
  • Under this settlement, there will be a limit of Rs. 10 lakh per borrower, and the facility will be available till October 31, 2021.

Impact of this RBI Policy in the Stock Market:

This policy of RBI will surely have a positive impact on the Pharma and Health Care Sector.  Also, this policy has shown the assuredness by the RBI to the Banking Sector. Overall, this policy proved to be a supporting policy for the Pharma, Health Care, Banking, and NBFC Sector.

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