Key Point (Highlights) from RBI Governor Shaktikanta Das’ media address: 17th April 2020

Key Point (Highlights) from RBI Governor Shaktikanta Das’ media address: 17th April 2020

As the country undergoes an extended nationwide lockdown to put a restriction on the spread of fatal coronavirus, Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the media on 17 April. Since the COVID-19 outbreak began in India, this was the RBI Governor’s second press briefing. This address was a big focus today for investors, they expect for a second stimulus package from the RBI after it announced its monetary policy last month amid the economic crisis due to the fatal novel coronavirus.

  • The LCR requirement of scheduled commercial banks being brought down from 100 per cent to 80 per cent with immediate effect. This shall be restored to 90 per cent by October 2020 and 100 per cent by April 2021: Governor Shaktikanta Das
  • Period of resolution plan for NPAs to be extended by 90 days: Governor Shaktikanta Das
  • Banks to maintain higher provision at standstill, which can be adjusted later for actual slippages: Governor Shaktikanta Das
  • We recognise that COVID-19 has challenged the ability of borrowers to repay. Thus the 90-day NPA norm shall exclude the moratorium period: RBI Governor Shaktikanta Das
  • Cashflow of households and businesses stands affected: RBI Governor Shaktikanta Das
  • Reverse repo rate is being reduced by 25 bps from 4 per cent to 3.75 per cent under Liquidity adjustment facility (LAF): Governor Shaktikanta Das

Also Read: RBI 7th bi-monthly policy review: 27th March 2020

  • RBI undertook three long-term repo operations (TLTRO) to ease liquidity constraints. The TLTRO option of Rs 25000 crore is to be conducted today (April 17): Governor Shaktikanta Das
  • The measures though significant were not substantial enough as a mere Rs 50,000 crore in the form of TLTRO is rather conservative. However, for the moment major concerns have been addressed as real estate and NBFC sectors have received massive relief, NBFCs (small and large) have liquidity coming in from TLTRO 2.0, financial institutions like SIDBI, NABARD and NHB have received liquidity directly from the RBI and there is relief on the NPA recognition and stressed asset reclassification for Banks.
  • 25000 cr. to NABARAD.
    10000 cr. to NHB
    15000 cr to SIDBI
  • The services PMI contracted due to a sharp downturn due to the hit to export. The contraction in exports in March is at 34.6 per cent. It is much more serious than during the GFC: Governor Shaktikanta Das
  • Around 25-30 per cent sharp decline in electricity demand due to coronavirus: RBI Governor Shaktikanta Das
  • RBI has injected 3.2 per cent of GDP into the economy to tackle liquidity situation: Governor Shaktikanta Das
  • India’s forex reserves enough for 11.8 months of imports. Well maintained at $476.5 billion.
  • India expected to show a sharp turnaround post the COVID-19 crisis. India expected to post a sharp turnaround in FY22 with 7.4 per cent growth as per IMF. India expected to post a sharp turnaround in 2021-2022: Governor Shaktikanta Das
  • Global financial markets remain volatile; crude oil prices remain in flux. Crude oil prices remain in a state of flux despite production cuts by OPEC+India is expected to post sharp turnaround by growing at 7.4 per cent in FY22: Governor Shaktikanta Das
  • RBI has injected 3.2 per cent of GDP into the economy to tackle liquidity situation: Governor Shaktikanta Das
  • India is estimated to have the highest growth among G20 countries as per IMF: Governor Shaktikanta Das
  • Targeted long term repo operations to the tune of Rs 50,000, to begin with. Based on our how the market uses it the RBI may scale up the amount:Governor Shaktikanta Das
  • RBI increases WMA limit of state govts by 60% for 30%:Governor Shaktikanta Das
  • “Decided for all accounts where moratorium or deferment has been applied, there would be an asset classification standstill. NBFCs have flexibility under current accounting standards to provide relief to borrowers. The standstill provision will be from March 1 to May 31 and banks will have to maintain higher provisions of 10 percent on standstill accounts. For same period as the original announcement provisions can be adjusted later for actual slippages on such accounts.”
Repo Rate 4.40%
Reverse Repo Rate 3.75%
Marginal Standing Facility(MSF) Rate 4.65%
Bank Rate 4.65%
Cash reserve Ratio(CRR) 3%
Statutory Liquidity Ratio(SLR) 18%

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