RBI Governor Shaktikanta Das addressed media for the second time after the corona pandemic. This morning he announced to cut the reverse repo rate by 25 bps. There has been no reduction in CRR and repo rate. RBI has announced 50 thousand crores support to MFIs and NBFCs. This will be under the Targeted Long Term Repo Operation.
To give relief to banks, the reverse repo rate has reduced from 4% to 3.75% while there is no change in the repo rate. RBI will support with 50 thousand crore to NABARD, SIDBI and National Housing Board (NHB). The states ways and means advances (WMA) limit has increased by 60 per cent. This limit will extend till 30 September. Earlier on March 27, the Monetary Policy Review had simultaneously cut the repo rate by 0.75%.
Highlights of Important announcement by RBI today
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The central bank increased the states WMA limit by 60 per cent.
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RBI gave 90 days relief to banks in NPA rules.
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The duration of the moratorium will not be count in NPA.
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Banks will not give dividends from their profits till further instructions.
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SIDBI will get 15 thousand crores, NHB will get 10 thousand crores and NABARD will get 25 thousand crores.
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The central bank said sectors would have to invest within a month of receiving the cash.
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The reverse repo rate will cut by 0.25%, from 4% to 3.75%.
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The Commercial Realty Project loan received a one-year extension.
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RBI forecasts 7.4 per cent GDP growth in 2021-22.
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Liquidity should be maintained in the system.
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Facilitate and increase bank credit flow.
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Emphasis on reducing financial pressure.
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To start formal working in the markets.
The central bank eye on countries financial system and other banking organizations
RBI governor has introduced three long-term repo operations (TLTRO) to ease cash flow. The 25,000-crore TLTRO will be launched today i.e. on 17 April. This has led to a boom in the corporate bond market. Also, the pressure of redemption on mutual funds has come down. The Central bank continuously monitoring of the situation of financial institutions working. Financing provided to credit institutions through Targeted Long Term Refining Operations (TLTRO). Under this, banks provided funding on attractive terms for a long time.
Banks will not give dividend till further notice from the fiscal year 2020: RBI Governor Shaktikanta Das
Scheduled commercial banks and other financial institutions will provide 20% more. In view of the challenges of loan account resolution. The resolution period has extended to 90 days. 180 days given for the resolution of the defaulting large loan account. Under the June 7 circular, 20% more will be exempted from provisioning. Along with this, banks will not give dividends till the next notice from fiscal year 2020.
LCR decreased from 100 to 80 per cent with immediate effect: RBI
Similarly, the liquid coverage ratio (LCR) for scheduled commercial banks has reduced from 100 per cent to 80 per cent. This decision came into force with immediate effect. By October 2020, it will be increased to 90 per cent and by April 2021 it will raise to 100 per cent again. This system will lead to a surplus of 6.91 lakh crore, which will allow banks to use this surplus in the economy. RBI announced to give 15 thousand crores to SIDBI, 10 thousand crores to NHB, and 25 thousand crores to NABARD.
Rural demand expected to rise in and after this Convid-19 crisis
Sowing of paddy is 37 per cent higher by the end of April this year than last year. On April 15, the Meteorological Department has also predicted a normal monsoon this year. Some financial markets remain volatile. Crude oil prices have also been moderating. OPEC countries have decided to reduce crude production. According to IMF estimates, after the India Coronavirus crisis, the country’s GDP growth in fiscal year 2022 expected to be 7.4%.
India’s growth may be the best among the G20 countries
According to IMF estimates, India’s growth may be the best among the G20 countries. Das said that banks have ensured proper work, their work is praiseworthy. 1.9% growth projected this year. Support of Rs 50,000 crore announced to small and medium financial institutions. From this 25 thousand crore announced to SIDBI and 10 thousand crore to National Housing Bank and Rs 15,000 crore to NABARD. The RBI has estimated a 7.4% growth rate after the end of the corona.
There is no shortage of cash in the system: RBI Governor Shaktikanta Das
Das said that there will be no shortage of cash in the system, 91% of the ATMs in the country are functioning. Lowering the reverse repo rate will make it easier for banks to lend. The COVID-19 has challenged borrowers’ ability to repay. In this way, a 90-day moratorium will be helpful in this. According to him, India’s foreign exchange reserves have been upwards of $ 476 billion and the debt given by NBFCs to commercial real estate will also get similar relief. This will provide relief to NBFCs and the real estate sector. New steps will be announced whenever needed. Banks will keep their high efficiency at their level, which can be adjusted later for the actual slippage.
