RBI governor Shaktikanta Das address to the press conference: Highlights (22nd May 2020)

RBI governor Shaktikanta Das address to the press conference: Highlight (22nd May 2020)

RBI Governor Shaktikanta Das said the GDP growth in FY21 is expected to be in negative territory. Besides, the Reserve Bank of India (RBI) also slashed repo rate by 40 basis points (bps) to 4 per cent and maintained the stance ‘accomodative’. Consequently, reverse repo rate now stands at 3.35 per cent from 3.75 per cent earlier.

♦Highlights Point 

• RBI has injected funds amounting to 3.2% of GDP into the economy since the February 2020 monetary policy meeting to tackle the liquidity situation (Extra money)
• Policy repo rate cut by 40 basis points – from 4.4% to 4%
• Policy Reverse repo rate cut by 40 basis points – from 3.75% to 3.35%
• The biggest blow came from private consumption slump with consumer durables production falling 33 percent in March 2020
• Volume of world trade can shrink by 13-32% this year
• GDP growth is estimated to be in negative territory in FY 2020-2021
• RBI extends Rs 15,000 cr line of credit to EXIM Bank for 90 days to avail USD swap facility
• RBI extends the three-month moratorium, from June 1 to August 31
• Maximum permissible period of pre and post shipment of credits increased from 1 year to 15 months
• Group exposure of bank raised from 25% to 30% till June 30, 2021
• In order to manage importer’s operative cycle, outward remittances against normal imports into India, reduced to 6 months from 12 months

Voluntary retention route for FPIs

1. Voluntary retention route for FPIs announced
2. Extension of 3 months
3. 75% utilisation of investment limits need to be met

Flexibility of SIDBI

1. Another 90 days extension for the 90-day term loan facilities offered
2. This will provide additional liquidity support to the MSME sector
3. RBI decides to roll over the facility of Rs 15,000 cr

Policy announcements

1. Improve functioning of markets and market participants
2. Support exports and imports
3. Relief on debt servicing
4. Steps to ease the financial constraints of state governments

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