To Enforce more Liquidity, RBI further Reduces the Repo Rate
Apr 22, 2020 Real Estate News
On Friday, the Reserve Bank of India reduced its repo rate by 25 basis points, bringing it down from 4 percent to 3.75 percent. The move is taken amidst the outbreak of coronavirus to boost the economy and facilitate the bank credit flow in the market. The lockdown across the country has brought the economy to a virtual halt, and the step is taken to help the economy in times of crisis.
RBI Governor, Shaktikanta Das stated that the mission is to minimize the epidemiological damage in the country due to coronavirus. The governor also announced conducting of targeted long- term repo operation (TLTRO) with Rs 50,000 crore to incentivize the credit flow of the banks, enable the normal functioning of the market and maintain the liquidity in the system.
The statement issued by the bank also directed the banks to invest 50 percent of the funds under TLTRO 2.0 to small and mid-size non-banking finance companies (NBFCs).
Shaktikanta Das also stated that the NBFCs' loans to delayed commercial real estate projects could be extended by a year without restricting. The loans given by NBFCs to real estate companies will get a similar benefit as extended to the scheduled commercial banks.
Further, the RBI Governor announced a special relief package of Rs 50,000 crore for the National Bank for Agricultural and Rural Development (NABARD Rs 25 crore), Small Industrial Development Bank of India (SIDBI for Rs 15,000 crore) and National Housing Bank (NHB for Rs 10,000 crore).
Shaktikanta Das directed banks not to make any dividend pay-outs until further notice. He said that the 90- days non- performing asset (NPA) norm will not apply on moratorium granted on the existing loans by the banks. In the statement released, Das also said that the macroeconomic landscape has deteriorated since March 27. The global economy is going through the worst phase since the Great Depression. The contraction in exports at minus 34.6 percent is much severe than the 2008-09 global financial crisis.
According to the International Monetary Fund (IMF), India is one of the few countries projected to clock 1.9 percent GDP growth. It is expected to grow at a rate of 7 percent in FY21.
Das stated that the data on monsoon for sowing and fertilizers looks well for the agricultural and rural outlook and the situation is cloudy in other industrial sectors. Since the lockdown has been imposed since March 25, the RBI has taken several steps to ensure the normal functioning of the banks and economy. Das stated that during the lockdown, no downtime was observed for the internet or mobile banking. The ATMs have worked at 91 percent capacity during the lockdown period.
RBI Governor, Shaktikanta Das stated that the mission is to minimize the epidemiological damage in the country due to coronavirus. The governor also announced conducting of targeted long- term repo operation (TLTRO) with Rs 50,000 crore to incentivize the credit flow of the banks, enable the normal functioning of the market and maintain the liquidity in the system.
The statement issued by the bank also directed the banks to invest 50 percent of the funds under TLTRO 2.0 to small and mid-size non-banking finance companies (NBFCs).
Shaktikanta Das also stated that the NBFCs' loans to delayed commercial real estate projects could be extended by a year without restricting. The loans given by NBFCs to real estate companies will get a similar benefit as extended to the scheduled commercial banks.
Further, the RBI Governor announced a special relief package of Rs 50,000 crore for the National Bank for Agricultural and Rural Development (NABARD Rs 25 crore), Small Industrial Development Bank of India (SIDBI for Rs 15,000 crore) and National Housing Bank (NHB for Rs 10,000 crore).
Shaktikanta Das directed banks not to make any dividend pay-outs until further notice. He said that the 90- days non- performing asset (NPA) norm will not apply on moratorium granted on the existing loans by the banks. In the statement released, Das also said that the macroeconomic landscape has deteriorated since March 27. The global economy is going through the worst phase since the Great Depression. The contraction in exports at minus 34.6 percent is much severe than the 2008-09 global financial crisis.
According to the International Monetary Fund (IMF), India is one of the few countries projected to clock 1.9 percent GDP growth. It is expected to grow at a rate of 7 percent in FY21.
Das stated that the data on monsoon for sowing and fertilizers looks well for the agricultural and rural outlook and the situation is cloudy in other industrial sectors. Since the lockdown has been imposed since March 25, the RBI has taken several steps to ensure the normal functioning of the banks and economy. Das stated that during the lockdown, no downtime was observed for the internet or mobile banking. The ATMs have worked at 91 percent capacity during the lockdown period.
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