To overcome challenges from Covid-19 related challenges, RBI Governor Shaktikanta Das announces several financial measures to strengthen market

From injecting Rs 50,000 crore to refinance the financial institutions in the country to cut the reverse repo rate from 4 per cent to 3.75 percent, so that banks are nudged to lend more, the RBI has taken several steps to strengthen the market during challenges thrown by coronavirus.

Addressing the media through video conferencing, the RBI Governor today said these measures have been taken with an aim to ensure financial stability in the country. He, however, termed IMF’s growth projection very positive.

“India is among the handful of countries which is projected to somehow cling on to a positive growth rate at 1.9 per cent. In fact, this is highest GDP growth rate among the G-20economies as estimated by the IMF,” the RBI Governor said

The RBI Governor said that the central bank is closely monitoring the developments and is vigilant.

The other measures unveiled by the RBI include providing Rs 50,000 crore to refinance all Indian financial institutions — Rs 25,000 crore to Nabard, Rs 15,000 crore to SIDBI and Rs 10,000 crore to NHB — and increasing the ways and means advances (WMAs) limit to 60 per cent to allow sates the flexibility to borrow and ensure that their borrowings are not bunched up in the early part of this financial year.

Among the regulatory measures, the RBI has allowed the three-month moratorium period on loans (from March 1, 2020 to May 31, 2020) to be excluded by banks from the counting of days past due (90 days) when it comes to asset classification by banks.

However, during this standstill period on asset classification, banks have to make a provision of 10 per cent and the same can be reversed if there is no slippage.

Given the challenges in resolution, the RBI has extended the resolution time period by 90 days. Stressing on the need to conserve capital during the current challenging times, the RBI Governor said scheduled commercial banks and co-operative banks cannot declare dividend till September-end 2020.

In a bid to provide relief to NBFCs with exposure to the commercial real estate sector, the RBI has aligned the date of commencement of commercial operations with that of commercial banks so that delays in execution of projects in the current environment doesn’t result in the projects becoming non-performing.

Assuring that the RBI will act as and when the need arises, the Governor said with retail inflation expected to go down to about 4 per cent in the second half of FY21, it will open up space for rate action.