As per Governor Shaktikanta Das‘s ordeal, the Reserve Bank of India (RBI) holds enough power to withstand the economic impact of the coronavirus pandemic. In addition to this, the Monetary Policy Committee (MPC) of India rolled out a few measures that are relieving the banks and their customers until the virus outbreak subsides.
By providing liquidity to the banks, RBI is ensuring that they have enough time to cope with their losses. They can also prepare themselves to lend heavily once the lockdown is over on 14th April. So what are the new measures imposed by the RBI? Read further to understand.
- Every instalment provided to businessmen and women and individuals with interest has been deferred for up to 3 months to deal with the crisis. However, every bank is allowed to take matters into their own hands and decide who will benefit from this measure.
- RBI has slashed the repo rate by 75 bps or 0.75%. This will provide a good chance for people to take loans for a car, personal, home or any other causes. However, as convenient this move seems to be, the rate of interest levied will play a major role in relieving the borrowers. We are hoping for an addition 1.25 cut on the interest rates.
- The MPC has also lowered the Cash Reserve Ratio (CRR) by 100 bps.
- Commercial banks all over India have issued a moratorium of three months for paying instalments on term loans from 1st March 2020.
- As margins can be recalculated, businesses have been allowed to draw more working capital.
- If there is any delay in repayment of term loans, those accounts will not be termed as NPAs for the next three months.
- Banks are allowed to borrow another Rs. 1.3 lakh crore from the Reserve Bank of India (RBI). The standing facility has hence been increased by 3%
- Banks are also allowed to avail durable liquidity of up to Rs. 1 lakh crore from RBI for three years.
- The capital conversion buffer’s last tranche has been deferred by six months.
We are yet to witness what other initiatives will be taken by the RBI in the days to come.
Source: Business Today
