RBI Cuts Reverse Repo Rate, Announces Rs 1 Lakh Cr Liquidity Lifeline

by GoNews Desk 1 month ago Views 1076
RBI Cuts Reverse Repo Rate, Announces Rs 1 Lakh Cr
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced a slew of measures to tackle the economic crisis caused by the COVID-19.

In a press conference, he said the RBI has cut reverse repo rate by 25 bps to 3.75 percent from 4 percent and announced Rs 1 lakh crore liquidity lifeline. RBI announced that banks and cooperative banks shall not make any dividend payouts until further notice. It also said that NBFCs can grant relaxed NPA classification to their borrowers.

Also Read: COVID-19 Combat: Motorcycle Maker Makes Mobile Ambulances

Here are the key announcements made by the RBI Governor:

  • 25 bps cut in reserve repo rate to further provide liquidity into the system as it would make banks reluctant to invest money at lower rate with RBI
  • Rs 50,000 cr liquidity lifeline to NABARD, SIDBI and the National Housing Bank, so that small lenders don’t face problems
  • New proposals are being considered for concessions in bank credit flow
  • IMF projection of 1.9% India’s GDP growth highest among the G20 countries
  • 90-day NPA norm not to apply on moratorium granted on existing bank loans
  • NBFCs to give relaxation in NPA classification for their borrowers
  • Banks not to make any further dividend payouts in the wake of economic fallout arising from COVID-19
  • LCR requirement of banks brought down to 80% from 100%, to be restored in phases by April next year
  • Loans given by NBFCs to real estate companies to get similar benefits as given by scheduled commercial banks
  • RBI will monitor evolving situation continuously, use all its tools to deal with the pandemic fallout
  • Bank ATMs operating at 91% capacity. Banking, Internet Banking, Mobiles working seamlessly
  • Decline in the micro-economic outlook after March 27 and in the Services PMI registered in March
  • In March 2020, export remained very poor compared to the global recession
  • Power demand fell by up to 30-35% in the country during the lockdown spell
  • Despite the lockdown, the sowing of crops in the agriculture sector has been better than expected. With estimates of a normal monsoon, better demand is expected from rural areas
  • The Forex Reserve is $476.5 billion at present, which is sufficient

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