Delhi: Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic.

The central bank reduced the reverse repo rate, the rate at which banks park their fund with the central bank, by 25 basis points to 3.75 per cent. This will encourage banks to lend to the productive sectors of the economy.With regard to other measures, Das said RBI will begin with giving an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) to be undertaken in tranches.

Besides, he announced a re-financing window of Rs 50,000 crore for financial institutions like Nabard, National Housing Bank and Sidbi

Has the NPA rules also eased?

Yes, On March 27, RBI gave a three-month exemption to repay the loan installments. According to the RBI announcement on Friday, the process of declaring NPA i.e. non-performing assets will not include the three months from March 1 to May 31. The rules say that after the repayment of loan is delayed by 90 days, banks declare that account as NPA. Friday’s announcement means that the NPA’s 90-day count will begin no later than March 1, now it will start from May 31 to pay installments.

Key points from the press conference:

  • The central bank would launch long-term repo operations (TLTROs) worth Rs 50,000 crore to help non-banking financial companies.
  • The level of foreign exchange continues to be robust at $476.5 billion that is equivalent to 11.8 months of imports
  • The RBI had injected liquidity worth 3.2 percent of GDP. The systemic liquidity absorption at Rs 4.36 lakh crore during March 27-April 14
  •  RBI cuts reverse repo rate by 25 basis points to 3.75 percent from 4 percent earlier. The move has been taken to allow banks to lend more.
  • RBI has barred all scheduled commercial banks to make any dividend payout for the year ended March 2020 
  •  RBI will provide a special refinancing facility of Rs 50,000 crore for the three institutions namely, NABARD, SIBDI & National Housing Bank, to enable them to meet sectoral credit needs
  • The entire moratorium period allowed by RBI will be excluded from the 90-day NPA(Non-performing asset) cycle