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RBI Guv Announces 'Asset Classification Standstill On All Loans Placed Under Moratorium'

RBI Guv Shaktikanta Das on Friday announced additional regulatory measures decided by RBI in response to the economic crisis caused by the COVID-19 pandemic.


Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday in his video briefing announced measures related to Asset Classification while speaking of the additional regulatory measures decided by RBI in response to the prevailing economic crisis due to COVID-19. Among the slew of measures, the RBI eased asset classification norms saying that there would be an asset classification standstill for all accounts where moratorium or deferment has been applied.

"Economic activity has come to a standstill during the period of the lockdown with consequential lingering effects which have unambiguously affected the cashflows of households and businesses," the RBI governor said.

"It has been decided that in respect of all accounts for which lending institutions decide to grant moratorium or deferment and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period, that is there would be an asset classification standstill for all such accounts from March 1 to May 31, 2020," he added.

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Sharp turn-around for India

In his video briefing, the RBI Governor stated that India is estimated to have the highest growth among G20 countries and is amongst the handful of countries to have positive GDP growth as per the International Monetary Fund (IMF). Das opined that the macroeconomic situation has deteriorated and the global economy may plunge into the worst recession since the great depression.

He added that India is expected to show a sharp turnaround post the COVID-19 crisis in FY22 with a 7.4% growth as per the International Monetary Fund. In his address, the RBI governor thanked the people involved in essential services. He announced that RBI has cut reverse repo rate from 4% to 3.75% and has provided Rs 50,000 cr special finance facility to financial institutions such as Nabard, Sidbi, NHB. The RBI address comes a day after Prime Minister Modi met Finance Minister Nirmala Sitharaman to discuss the economic situation in the country following the prolonged lockdown due to the coronavirus pandemic.

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