RBI governor Shaktikanta Das ease bank credit, reverse repo rates

RBI Governor Shaktikanta Das unveiled the measures to ease liquidity and bank credit and to support the economy and enable normal functioning of markets, as part of the economic relief to mitigate the fallout of coronavirus lockdown.  He cut the reverse repo rate by 25 basis points to 3.75%, while keeping the repo rate unchanged, in emergency measures to provide more relief to an economy fighting the fallout of coronavirus.

Earlier, last month, the RBI advanced its Monetary Policy Committee meet and cut the repo rate by a massive 75 basis points, among other emergency measures, to add to the government's economic relief to mitigate the fallout of the coronavirus and the lockdown.

Before that, Finance Minister Nirmala Sitharaman had announced a mega economic relief package worth about Rs 1.7 lakh crore, which included insurance for health workers; higher wages reaching up to 5 crore families under MGNREGA employment scheme; free wheat, rice and pulses distribution for three months to 80 crore people; cash transfers for three months to poor women. Even before that, RBI had announced mega liquidity measures, pumping in money into the system via LTROs.

However, there have been calls on the RBI to further ease requirements for the non-banking finance companies, which still need to repay their dues to banks on time.

Highlights of today’s announcement by RBI

1. IMF estimates cumulative loss of $9 trillion to global GDP in 2021, 2022

2. India expected to grow at 1.9% growth as estimated by IMF

3. IMF Says India is expected to post sharp turnaround by growing at 7.4% in FY22

4. IMF projection of 1.9% GDP growth for India is highest in G20

5. RBI's liquidity injection has been at 3.2% of GDP since Feb 6-Mar 27, 2020

6. ATMs are operating at 91% capacity

7. Banking, Internet Banking, Mobiles working seamless

Summary brought to you by *CVOCA*

8. NABARD, SIDBI and NHB, etc to get additional funding of

     * NABARD - Rs. 25,000 Core

     * SIDBI - Rs. 15,000 Crore

      * NHB –Rs. 10,000 Crore

9. Reverse Repo Rate , RBI has absorbed 6.9 Lakh Crore and the Fixed Repo Rate to be reduced by .25 % from 4% to 3.75%

10. No change in Policy Repo Rate

11. WMA Limit of States by 60% over and above March 2020 Level

12. Banks to invest 50% of Funds under TLTRO 2 in Small, Mid Size NBFC

13. Moratorium Period to be excluded from 90 Days NPA Period and the NBFCs to give relaxation in NPA classification for their borrowers

14. Banks not to declare Dividend for FY 2019 – 2020