Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday addressed the impact of the COVID-19 crisis on various sectors of the economy along with releasing an array of relief measures to tackle the economic slump owing to the pandemic and the lockdown. Along with announcing a slash in the reverse repo rate and a Rs 50,000 cr special finance facility to institutions such as NABARD, SIDBI, NHB, here are some of the major announcements by the RBI Governor.
The RBI Governor said that Rs 25,000 crore would be disbursed to NABARD, Rs 15,000 crore to SIDBI and Rs 10,000 crore to NHB. "It has been decided to provide special refinance facilities for an amount of Rs 50,000 crores to National Bank for Agriculture & Rural Development, Small Industries Development Bank of India, and National Housing Bank to enable them to meet sectoral credit needs," said the RBI Governor.
The RBI Governor stated that an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) will be undertaken in tranches. He said surplus liquidity in the banking system has increased substantially as a result of the central bank's actions.
The RBI announced its decision to slash the reverse repo rate under liquidity adjustment facility (LAF) from 4% to 3.75% "It has been decided to reduce the fixed reverse repo rate under liquidity adjustment facility (LAF) by 25 basis points from 4% to 3.75%, with immediate effect," said Shaktikanta Das.
Quoting the International Monetary Fund (IMF), the RBI governor revealed that the projected 1.9% GDP growth for India is highest in G20 countries adding that India is expected to post sharp turnaround in 2021-22."For 2020-21, International Monetary Fund projects sizable reshaped recoveries, close to 9 percentage points for the global GDP. India is expected to post a sharp turnaround and resume its pre-COVID, pre-slowdown trajectory by growing at 7.4% in 2020-21," he said.
RBI governor Shaktikanta Das said that the inflation is on a declining trajectory and could fall below the central bank's 4 percent target by the second half of this fiscal amid challenges posed by COVID-19 pandemic.
The RBI governor revealed that contraction in exports in March 2020 was at 34.6% adding that this was worse than the global financial crisis of 2008-2009. "However, amidst all this, the level of Forex Exchange Reserves which we have continued to be robust," he added.
The RBI Governor also directed asked all banks not to make any dividend payments to shareholders for the time being keeping in mind the financial challenges during the COVID-19 pandemic. He also brought down the LCR (Liquidity Coverage Ratio) requirement of banks to 80% from 100%,