Fundraising via bonds hits a peak at ₹7.45-lakh crore
December 21, 2020
This is 8.3% more than last year’s ₹6.87-lakh cr
Riding on low-interest rates and policy reforms by the Reserve Bank of India (RBI), Indian corporates have raised the highest-ever sum of 7.45-lakh crore through rupee bonds this year.
This is 8.3 per cent higher than ₹6.87-lakh crore raised in 2019. A total of 5.12 lakh crore raised in 2018. With another 10 days for the year to end, companies are expected to raise another ₹20,000-25,000 crore.
“Covid-19 had an impact in March and April, when the companies had restrained from raising funds through bonds, but then there was a sharp recovery in May. The reasons included an ample liquidity in the system, lower interest rates and RBI’s introduction of Targeted Long-Term Repo Operations (TLTRO), which helped a lot in terms of corporates to issue more bonds,” said Ajay Manglunia, Managing Director and head institutional fixed income at JM Financial.
Synopsis
The central bank announced a series of liquidity easing measures as its response to the COVID-induced contraction in the economic activity since end of March this year.
Agencies
Former RBI governor Duvvuri Subbarao
MUMBAI: Unwinding of the easy liquidity conditions will be a major challenge for the Reserve Bank which has done well in preserving financial stability of the economy post the COVID-induced nation-wide lockdown, according to former RBI governor Duvvuri Subbarao While managing a crisis is extremely difficult, RBI had been successful in preserving the financial stability of the economy during the present crisis said Subbarao, the central bank is going through an extremely difficult situation when they do not have a benefit of hindsight.
Former RBI GovernorD Subbarao on Wednesday said that managing a crisis is extremely difficult and the central bank had been successful in preserving the financial stability of the economy during the present COVID-19 crisis. Addressing a virtual event organised by industry body CII, Subbarao noted that all actions of the RBI were driven by the dual objective of achieving financial stability and preventing a financial crisis, and secondly, transmitting money to productive sectors of the economy. While managing a crisis is extremely difficult, the RBI has been successful in preserving the financial stability of the economy during the present COVID-19 crisis, he said.
RBI has preserved financial stability of economy during COVID crisis, says Subbarao
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Last Updated: Dec 16, 2020, 10:14 PM IST
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Synopsis
Subbarao noted that though governments and central banks of the world are presently operating from the playbook of the Global Financial Crisis in 2008-09, the coronavirus crisis is quite different. While GFC was an asset crisis that hit the financial sector first, the coronavirus crisis first impacted the real sector, he pointed out. The former RBI Governor said there were certain key elements to the central bank s monetary policy response so far.
Agencies
Subbarao, however, opined that given the excessive liquidity in the system it could become a challenge to wind down liquidity going forward.
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