firms and particularly the uncertainty surrounding their economic outlook also made banks increasingly reluctant to grant loans to smes. moreover, the financial crisis has put a strain on banks ’ balance sheets, leading them to increasingly tighten the terms and conditions for granting credit. therefore, the combination of lower demand for loans, on the one hand, and tighter credit supply conditions, on the other hand, has led to a decline in the annual growth rate of loans to enterprises. in the euro area loan growth declined from 17. 5 % in the last quarter of 2008 to about 2 % in the third quarter of 2009. so how bad has the situation been for smes? let me briefly give you the answer to this question based on the evidence from our sme survey conducted on cooperation with the european commission. our survey evidence reveals that, amid exceptionally adverse economic and financial conditions, 77 % of smes that applied for a bank loan in the first half of 2009 received some or whole amount they had applied for. as i mentioned, this is a new survey. so, it is not yet possible to compare these data over time, and hence, makes it difficult to assess whether the bank loan rejection rates indeed indicate severe supply constraints. in fact, even at times of sound economic growth, some bank loan applications will be rejected, for instance owing to the lack of a convincing business plan. nevertheless, the survey has also shown that 43 % of euro area smes that had applied for a bank loan reported a deterioration in the availability of loans in the first half of 2009. this seems, in particular, point to increases in charges, fees and commissions or tighter procedures, collateral requirements and other types of required guarantees. interestingly, large firms were somewhat more negative in their assessment of bank loan availability, with nearly 50 % reporting a deterioration. still, i believe, it has become clear that firms ’ access to finance came certainly under pressure during the current financial and economic crisis. looking further ahead, we expect that the growth of loans to enterprises is likely to moderate further before starting to recover. this, however, is in line with past recession patterns. we know that the growth of loans to non - financial corporations normally tends to lag real gdp growth by about three quarters. this is usually linked to the fact that firms tend to make use of their internal funds first before turning to external financing. so overall, once the severity and duration of the economic slowdown are taken into account, recent credit developments appear to be broadly in

##ment of interest ; restructuring of msme loans, etc. ( b ) liquidity augmenting measures : ltro / tltro / refinance schemes for various sectors including stressed sectors ; reduction in crr, and other measures totalling about ₹12. 81 lakh crore ( 6. 3 per cent of nominal gdp of 2019 - 20 ). ( c ) countercyclical regulatory measures to ease stress on borrowers and the banking system – relaxation in regulatory compliance ; conservation of capital by banks ; relaxation in group exposure norms, etc. ( d ) measures to ensure uninterrupted flow of credit - significant interest rate cuts ( 115bps ) ; assuring markets of easy financing conditions ; exemption from crr maintenance for incremental retail and msme loans ; extension of priority sector classification for bank loans to nbfcs for onlending ; rationalisation of risk weights for regulatory retail portfolio and individual housing loans, etc. ( e ) framework for resolution of covid - related stress for individuals and businesses. ( f ) closer surveillance of supervised entities focusing on business process resilience and continuity, proactive management of risks, stress tests and proactive raising of capital, etc. 11. our principal objective during this pandemic period was to support economic activity ; and looking back, it is evident that our policies have helped in easing the severity of the economic impact of the pandemic. i would like to unambiguously reiterate that the reserve bank remains steadfast to take any further measures, as may be necessary, while at the same time remaining fully committed to maintaining financial stability. iii. adaptations and learnings : way forward 12. the recent period has given us an opportunity to learn and adapt and decide on the way forward. in today ’ s lecture, i would like to focus on three key areas : ( i ) stability of the banking and non - banking financial sector ; ( ii ) external sector stability ; and ( iii ) fiscal stability. let me first focus on the banking and non - banking financial sectors. governance reforms 13. integrity and quality of governance are key to good health and robustness of banks and nbfcs. recent events in our rapidly evolving financial landscape have led to increasing scrutiny of the role of promoters, major shareholders and senior management vis - a - vis the role of the board. the rbi is constantly focussed on strengthening the related regulations and deepening its supervision of financial entities. 14.