Daijiworld Media Network - Mumbai (SHP)

Mumbai, Apr 17: RBI Governor Shaktikanta Das on Friday 17 addressed the media to announce more liquidity measures. The RBI Governor stated that the apex financial body was formulating measures to cushion the economic blow. "Today humanity is facing the trial of its time, as COVID-19 grips the world with its deadly embrace. In this kind of environment, Reserve Bank of India (RBI) has been very proactive and monitoring the situation closely."

He thanked the RBI staff who are working to maintain the flow of currency. He expressed gratitude to the people working on the frontline of the COVID-19 pandemic. Das appreciated the banks and other financial institutions who are ensuring normal functioning amid the outbreak.

On April 14, International Monetary Fund (IMF) released its global growth projections revealing that in 2020, the global economy is expected to plunge into the worst recession since 'The Great Depression', the RBI Governor said.

The RBI governor stressed that the economy had weakened since his last address, requiring the RBI to devise plans to keep the economy steady. On a positive note, Das asserted that Indian growth rate is expected to be highest among the G20 nations at 1.9 per cent, as per the IMF estimates. "India among a handful of countries that are projecting positive growth," Das said.

The RBI governor also stressed that the global loss suffered from the pandemic amounts to USD 9 trillion, far greater than the combined economies of Japan and Germany.

Further the RBI Governor Shaktikanta Das said, "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 per cent in 2020-21.”

In a major relief announced, RBI Governor slashed the reverse repo rate. “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,” RBI Governor Shaktikanta Das said.

It has been decided to provide special refinance facilities for an amount of Rs 50,000 crore to National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, and National Housing Bank to enable them to meet sectoral credit needs: RBI Governor

In due time, the RBI is to announce new measures to maintain liquidity in the system, facilitate bank credit flow and ease the financial stress, Das asserted.

He pointed out that the contraction in exports in March 2020 at 34.6 per cent, turned out to be much more severe than during the 'Global Financial Crisis'. However, amidst all this, the level of Forex Exchange Reserves which we have continued to be robust, the RBI Governor said.

The RBI Governor said India has enough Forex reserves for 11.8 months of imports and is 'well maintained at USD476.5 billion'. He further said, "RBI's liquidity injection has been at 3.2 per cent of GDP since February 6 - March 27, 2020."

"Banks not to make any further dividend payout in view of financial difficulties arising from COVID-19," announces RBI.

The RBI Governor stressed that the 90-day NPA norm was not to be applied on moratorium granted on existing loans by banks.

He also stated that it was unfortunate how the lockdown brought the economic activity to a complete standstill.

LCR requirement of banks brought down to 80% from 100%; to be restored in phases by April next year, as per the RBI Governor.

In another announcement, the RBI Governor assured that the loans given by NBFCs to real estate companies would get a similar benefit as the scheduled commercial banks.

The RBI Governor also highlighted that the inflation may settle below the target of 4 per cent by H1FY21, barring any supply-side disruption and shocks.

He announced that the RBI is increasing the WMA limits for states by 60 per cent, to plan their market borrowings better. The facility will be available till September 30.

While ending his presser, RBI Governor Shaktikanta Das said, "This would not be the last that we hear from the central bank. The RBI is continuously monitoring the situation and will announce more measures whenever needed."