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FM says 15 measures to be announced today.

- Collateral free loan for MSMEs upto Rs 3 lakh crore.
- MSMEs with Rs 25 Crore outstanding loan or Rs 100 crore turnover can avail.
- 100 percent credit guaranteed (presumably by govt)
- To benefit 45 lakh MSMEs 1/n
Loans will be of 4 year tenure. 12 month moratorium on principal payment. Interest to be capped.
Announcement 2:
-- Rs 20,000 crore subordinate debt programme for stressed MSMEs
-- 2 lakh MSMEs to benefit including stressed / NPAs
-- Govt to provide Rs 4000 crore to the Credit Guarantee fund, which in turn will provide the debt.
Announcement 3:
-- Fund of funds with corpus of Rs 50,000 crore for equity infusion in MSMEs
Announcement 4:
-- Change in definition of MSMEs
-- Micro: Investment upto Rs 1 cr / turnover upto Rs 5 cr
-- Small: Investment upto Rs 10 cr / turnover upto Rs 50 cr
-- Medium: Investment upto Rs 20 cr / Turnover upto Rs 100 cr
Announcement 5:
-- For govt. procurement, global tenders disallowed for tenders upto Rs 200 crore.
Announcement 6:
-- Within the next 45 days, all MSME receivables will be cleared by Govt / CPSEs.
NEXT SET:
-- Liquidity relief for provident fund. Govt to pay EPF contribution for June-Aug, extending earlier measure. To infuse Rs 2500 crore liquidity.
-- Statutory PF contribution being reduced from 12% to 10%.
-- For central and state PSUs will continue to 12%. Employees will be given advantage of paying only 10%
NEXT SET: For NBFCs / HFCs / MFIs
-- Rs 30,000 crore special liquidity scheme to buy investment grade debt securities of NBFCs / HFCs/HFCs
-- Fully guaranteed by GoI (good)

(FM says: Not high quality but investment quality. Thats a constraint)
For NBFCs
-- Rs 45,000 crore partial guarantee scheme (existing scheme but expanded.
-- First loss guarantee of 20%. AA rated and below will be included. Unrated paper also eligible for investment.
FOR DISCOMs
-- Emergency liquidity injection of Rs 90,000 crore against receivables. Liquidity to be provided by PFC & REC
Didn't cover the last three parts on -- contractors/ real estate / tax parts. Pls follow this blog for those details. bloombergquint.com/economy-financ…
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Ira Dugal
@dugalira
1/n A thread on some of the points Raghuram Rajan makes on monetisation:

1) The government’s priority should be to protect the economy and spend what’s needed. It’s inability to finance itself or fears of monetisation should not be a constraint....
1-A) That’s not to say fiscal deficits don’t matter. Medium term roadmap must be clear else investors and rating agencies will take “fright.”

He suggests following NK Singh committee advice, using medium term debt targets and an independent fiscal council. 2/n
In normal times, direct monetisation would be inflationary. However in abnormal times, the excess Govt spending undertaken after monetisation will not lead to fresh credit being created as banks are risk averse.

Hence, it gets parked back at the RBI reverse repo window. 3/n
Read 8 tweets
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Ira Dugal
@dugalira
Answers to two questions on Yes Bank getting clearer:

1) What was the real quality of the bank's loan/investment book?

2) Will depositors keep the faith?
26.63% of corporate loan book is bad (after write-offs).
- Corporate NPA: Rs 31,731 cr
- Total NPA: Rs 32,878 cr
- SMA 1 + SMA 2: Rs 11,102 cr

If you assume much of SMA 1+ SMA 2 is corporate (going by current NPA proportions), about Rs 42.599 cr of corporate book is stressed.
The above is after write-offs in Q4. If you take Dec'19 numbers, about Rs 50,000 crore in corporate accounts were stressed.

That worked out to 38% of the corporate loan book was bad.
Read 9 tweets
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Ira Dugal
@dugalira
THREAD: RBI Governor Announcements

- MPC met over the last days. CUTS RATES BY 75 BPS
Reverse repo cut by 90 bps to discourage banks to park funds at RBI window
MPC vote 4-2. Difference on quantum of rate cuts
Read 9 tweets

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