RBI measures amid COVID-19
RBI preponed its 7
bi-monthly monetary policy meeting to 27
instead of having the meeting on 31
March and 3
April, 2020 in view of the
deteriorating economic situation. The central bank has brought in measures as
mentioned below to ensure adequate liquidity is available and to ease the liquidity
constraints related to COVID-19.
1) Reduced interest rates: The RBI reduced repo rate by 75 bps to 4.4 per
cent and reverse repo rate by 90 bps to 4 per cent to maintain financial
stability and revive growth.
2) Lowered CRR: The Cash Reserve Ratio (CRR) of all banks was also cut
down by 100 basis points to 3% of net demand and time liabilities (NDTL)
with effect from 28 March, 2020 for a period of 1 year. This reduction
would release liquidity of nearly `1.4 lakh crore and this dispensation
would be available till 26 March, 2021.
3) MSF rate increased: The borrowing limit under marginal standing facility
(MSF) is now increased to 3 per cent of SLR from 2 per cent. This
applicable with immediate effect up till 30 June, 2020.
4) Relaxation on EMIs for 3 months:: All commercial and co-operative
banks, NBFCs and all-India Financial Institutions are permitted to allow a
moratorium of 3 months on EMI payments except in case of credit-card
outstanding. Lending institutions can also allow deferment of interest
payments on working capital loans and overdrafts for three months. Such
deferment won’t be considered as NPAs
5) Postponed NSFR execution: RBI has also deferred implementation of Net
Stable Funding Ratio (NSFR) by six months to 1 October, 2020. As per the
BCBS, banks in India are required to maintain NSFR of 100 per cent.
6) Banks permitted to participate in NDF: Banks in India, which operate
International Financial Centre Banking Units are permitted to participate
in non-deliverable fund (NDF) market from 1 June, 2020.
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