Reserve Bank Governor Shaktikanta Das on Friday said about Rs 3.74 lakh crore liquidity on aggregate basis will be infused into the financial system to deal with the COVID-19 pandemic.RBI to infuse Rs 3.74 lakh cr liquidity into financial system
In a statement, the RBI said presently value of goods or software exports made by the exporters is required to be realised fully and repatriated to the country within a period of 9 months from the date of exports.
Reserve Bank of India slashed policy repo rate -- the rate at which RBI lends short term money to banks-- by a massive 75 basis points to 4.40% from 5.15% earlier, keeping in view the current lockdown situation to combat the spread of Covid-19. RBI Governor Shaktikanta Das in a remote address said that the MPC committee advanced their meeting to March 24-March 27 as compared to April1-3 scheduled earlier.RBI cuts repo rate by 0.75% to 4.40% amid Covid-19 outbreak
Make no mistake, it is a fight never seen before, Das warned while outlining the risks to Indian economy .
RBI Governor Shaktikanta Das predicted a big global recession and said India will not be immune. It all depends how India responds to the situation, he said. Global slowdown could make things difficult for India too, despite some help from falling crude prices, Das said, adding food prices may soften even further on record crop production.
The RBI seems to labour under the delusion that banks respond to an offer of funds with the same alacrity shown by the average Malayali male towards a glass of decent whisky placed before him. If the banks did not snap up debentures, commercial paper and other debt securities offered by private companies in the recent past, why would they develop a new taste for private company debt now?
India yesterday unveiled a Rs 1.7 lakh crore spending plan to curb the impact of the virus outbreak.
FM Nirmala Sitharaman had yesterday announced a Rs 1.70 lakh crore mega rescue package for the country's poor. This, along with today's RBI moves that will eventually release Rs 3.74 lakh crore of liquidity into the system, forms the frontline of India's response to the menace. Here is a look at how India is front-loading its countermeasures.
Luckily the oil prices have tumbled globally thanks to a geo-political face-off between major oil blocs.
Aiyar says India should drop its fiscal deficit fascination and go all out to help the poor.
Government sources said several regulators in other countries enjoyed such powers, which allowed them to tap phones and maintain a tighter vigil with an enforcement wing being part of the organisation set up.
The meeting between the Finance Ministry and Reserve Bank of India (RBI) will be held through video conferencing for the first time as there is lockdown across the country. As per the Budget, the government plans to borrow Rs 5.36 lakh crore from the market in 2020-21, higher than the Rs 4.99 lakh crore estimated for the current financial year.
Govt notified the amalgamation of 10 state owned banks into four as part of its plan to create stronger PSBs.
The government must act to cushion the impact. RBI must act in tandem, not just stand ready to cut rates if needed.
The Reserve Bank of India, which advanced a meeting of the rate setting panel by a week, Friday announced a 0.75 per cent cut in its policy rates, infusion of Rs 3.76 lakh crore of liquidity through moves like a cut in cash reserve ratio and also allowed banks to not treat any term loans as NPAs for three months if there is no repayment. ET's MC Govardhana Rangan shares his views on the central bank's measures amid coronavirus crisis. (Text: PTI)Rates slashed, EMIs paused: RBI's stimulus measures enough to counter economic impact of coronavirus?
Finance Minister Nirmala Sitharaman said,"appreciate RBI Governor Shaktikanta Das' reassuring words on financial stability. The 3-month moratorium on payments of term loan installments (EMI) and interest on working capital give much-desired relief. The slashed interest rate needs quick transmission."
The Finance Minister welcomed RBI Governor Shaktikanta Das' statement that the macro economic fundamentals of the Indian economy are sound, and in fact stronger than what they were in the aftermath of the global financial crisis of 2008-09.
"Second round of effects of the pandemic could operate through a slowdown in the domestic economic growth and it would obviously be a result of synchronised slowdown in global growth and as a part of that, the growth momentum in India would also be impacted somewhat", says RBI Governor Shaktikanta Das addressing the media.Covid-19 to impact domestic as well global growth: RBI governor
RBI is worried that the order could pave way for trade in virtual currencies, putting the banking system at risk.
"If required, the RBI will act as and when required and, as in the past, the RBI will be proactive and act in time,” Das said, when asked if the central bank needs to make an emergency move. His comments come just days after the U.S. Federal Reserve cut rates by 50 basis points in a surprise decision
The RBI had earlier permitted UCBs to have exposures up to 15 per cent and 40 per cent of their capital funds to a single borrower and a group of borrowers, respectively.
The gap between the main repurchase rate and the benchmark 10-year bond yield has begun to narrow.
"The Central Government has nominated Debasish Panda, Secretary, Department of Financial Services, Ministry of Finance, Government of India, New Delhi as a Director on the Central Board of Reserve Bank of India vice Rajiv Kumar," RBI said in a release.
India's central bank is likely to announce liquidity-boosting measures to help stabilise financial markets.
The ministers decided on delivering a joint G20 Action Plan, which will outline the individual and collective actions that G20 has taken and will be taking to respond to the pandemic, while also highlighting the medium-term measures needed to support the global economy during and after this phase.
The facility, operational from March 19 as part of the Business Contingency Plan (BCP), was up and running in 24 hours of the central bank taking a decision to this effect, according to an official. The war-room is in fact manned by 90 most critical staff from the Reserve Bank, 60 key personnel from its 600-people strong workforce from its external vendors and around 70 facility staff.
As with the coronavirus, if you don’t know what you don’t know, and you are still likely to be held liable for an outbreak, enforcing a quarantine may be the best way to wait and watch developments.
The second relief package may include tax concessions for industry sectors hit hard by Covid-19.
The authors said measuring uncertainty becomes an important task since this is not directly observable. “The lack of a clear definition of uncertainty makes the task of measurement even more difficult.”
The RBI may infuse fresh cash liquidity into the system through a second round of long-term repo operations.
Former RBI governor C Rangarajan said that supply side shocks should be the responsibility of the govt.
The RBI's response comes in the wake of Indian benchmark indices falling over fears that the nascent recovery seen in the Indian economy could be hit by the coronavirus outbreak. Globally, the spread of coronavirus in US, Italy and Iran has resulted in investors moving away from equities and putting their bets on government bonds.
Jalan highlighted that India's macroeconomic situation was already troublesome and the growth would be impacted further due to the COVID-19 pandemic. "And we should not worry about a fiscal deficit target being higher than what has been announced. Because this is much more important. You know if there is security matter or something then you spend money more," he said.
The Supreme Court last week rejected a plea by mobile carriers such as Bharti Airtel and Vodafone Idea Ltd for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 lakh crore. Some telcos are already struggling with mounting losses and debt and the additional liability has raised concerns of them defaulting on existing loans.
"It will be done very swiftly, it will be done very fast. 30 days is the outer limit. You will see very swift action by RBI to put in place a scheme to revive Yes Bank," Das said. Yes Bank was put under a government imposed moratorium last evening with depositors in the bank not allowed to withdraw more than Rs 50000.
"The monetary policy framework is in operation for the last three years. We are reviewing and analysing it internally as to how the MPC framework has worked. At an appropriate time, if required, we'll have discussion with the government," said the RBI governor at a media conference after he met the Finance Minister on the customary Budget briefing.
The coronavirus outbreak has brought a large part of the world's second-largest economy China to a standstill and its impact has been felt across industries. On January 30, the World Health Organization (WHO) declared the coronavirus (COVID-19) outbreak a global health emergency. The impact on India is felt through supply chain disruptions from China as well as regional players, who in turn are net importers from China.
In a bid to keep inflation under specified level, the government in 2016 had decided to set up Monetary Policy Committee headed by RBI Governor entrusted with the task of fixing the benchmark policy rate (repo rate). The six-member panel, which had its first meeting in October 2016, was given the mandate to maintain annual inflation at 4 per cent until March 31, 2021 with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
India needs not piecemeal actions, but coordinated effort by RBI, finance ministry & key agencies.
"A rate cut will not reduce the rate of infection — it won't fix a broken supply chain," Powell said yesterday after the Fed cut rates by 50-bps. SBI MF CIO Navneet Munot corroborates: "While the US Fed has cut rates and other central banks have shown a strong resolve to act, my sense is that monetary policy has almost run its course."
RBI governor Shaktikanta Das said RBI was prepared to take action to combat the effects of the disease and reiterated that there's room to cut interest rates in an interview to Bloomberg. He also said that the impact of the virus on India is via China and global trade. Indian banks have been asked to draw up contingency plans and send these to the RBI.
The RBI governor said there is no reason to doubt that the fiscal deficit for the next year would be met.
This will be a crucial move in making the entire financial ecosystem almost impossible to be gamed.
Reserve Bank Governor Shaktikanta Das on Saturday said transmission of rate cuts is expected to improve further in the coming days and that momentum is gathering pace on credit growth. Earlier this month, the central bank opted for a status quo on the benchmark interest rate, amid signs of hardening inflation and an uncertain global environment.Transmission of rate cuts to improve further: RBI Guv Shaktikanta Das
RBI in a statement said the outbreak of coronavirus in China and its spread across geographies will impact tourist arrivals and global trade, and has triggered sell off in equity as well as crude oil markets. Talking to reporters, Das said the extent of impact of coronavirus is still uncertain and unfolding, as he made a case for preparing a contingency plan to deal with the situation and its impact on the economy.
RBI Governor Shaktikanta Das on Thursday said the central bank has no plans to monetise the rising fiscal deficit. This is the third consecutive year that the government has revised its fiscal deficit target.
The proposed law seeks to enforce banking regulation guidelines of the RBI in cooperative banks while administrative issues will still be guided by the Registrar of Cooperative. The Bill proposes to bring cooperative banks on par with developments in the banking sector through better management and proper regulation of cooperative banks.
A combination of core WPI & core CPI inflation may be an improvement over current headline CPI inflation.
Thakur said various financial institutions, including IMF and RBI, have projected that India will once again attain fast growth. He said the fiscal deficit, which used to be at 5.2 per cent during the UPA regime, has come down to 3.3 per cent, though "this year it will be 3.8 pc and next year we will bring it down to 3.5 per cent."
While Finance Minister Nirmala Sitharaman's Budget for 2020-21 and recent steps have created a facilitating eco-system for reviving demand and consumption through a push on infrastructure projects, it is necessary to undertake land and labour reforms, bring efficiencies in agri marketing and focus on skill development, the RBI governor said.
The Central Board of Directors of the RBI at its 582nd meeting reviewed the current economic situation, global and domestic challenges and various areas of operations of the Reserve Bank. The board recommended aligning the financial year of RBI, currently July-June, with the government's fiscal year (April-March) from the year 2020-21. It approved forwarding a proposal to the government for its consideration, the RBI said in the statement.
Addressing the media after the customary post-budget meeting between the Finance Minister and the RBI, Governor Shaktikanta Das talked about the improving transmission of the rate cuts they had announced last year, the AGR ruling by the Supreme Court and growth projections.
The move will free up some reserves for banks to lend and revive consumption demand in these sectors.
Governor Das underscores the need for adopting a flexible inflation target for stability.
In a move that will enable banks and fintechs onboard customers remotely, RBI has amended its norms to allow the ‘know your customer’ (KYC) process to be completed through a mobile video conversation. The central bank has also facilitated eKYC and digital KYC by allowing use of Aadhaar or other e-documents in the customer due diligence process.
By keeping the stance accommodative, RBI has signalled that it is keeping its powder dry for now.
A govt-industry task force must be set up to to tackle the situation and avoid industry closures.
What matters more when deciding rates — growth-inflation dynamics or govt finances? As of now, it's a blur.
“It has been decided to permit extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by another one year without downgrading the asset classification, in line with treatment accorded to other project loans for non-infrastructure sector,” the RBI said.
Lenders do not want any borrower who makes use of the moratorium to fall into the category of a non-performing loan because of having missed payments in the previous two months – January and February. A loan gets classified as a bad loan if the interest or principal is overdue 90 days.
These changes will come into effect on April 7 and will continue up to April 17, the central bank said in a release.
CD rates have fallen up to 275 bps since Friday after the RBI announced liquidity injection of Rs 3.74 lakh crore into the system in an unscheduled bi-monthly policy announcement.
The Reserve Bank of India (RBI) has rejected requests for standstill in asset classification from banks, dashing the hopes of lenders as well as companies seeking to avoid the defaulter tag.
The detailed guideline stipulate that the reporting frequency of the CRILC (Central Repository on Information on large Credits)– UCBs return is quarterly to start with.
Rajan said economically, India is probably facing its greatest emergency since Independence.
The total economic cost of Covid-19 mitigation could well turn out to be 3.5-4% of GDP – a hefty $100-114 bn.
RBI has just delivered the biggest rate cut, bringing the repo rate to an all-time low of 4.40%. It has also cut the CRR by 100 basis points to unlock Rs 1.37 lakh crore primary liquidity in the banking system and allowed banks and other lending institutions to extend loan repayment schedules and moratorium by three months.RBI stimulus: Which sectors will gain the most?
Experts though have called on the government to consider a three-month moratorium on operators’ revenue-share commitments for the April-June quarter FY21, which would be more significant relief for the debt-laden telecom sector that is currently reeling under the impact of the adjusted gross revenue (AGR) payments crisis.
On what kind of expenditures that GoI must undertake, there is a plethora of advice.
With its latest round of announcements, the RBI will be injecting Rs 3.74 lakh crore into the country's financial system. These measures come just hours after Moody's cut India's growth forecasts for 2020 calendar year to 2.5% from 5.3%.
Some of India’s most highly-rated companies have had to delay bond offerings.
The Reserve Bank of India slashed interest rates on Friday, following other central banks that have taken emergency measures to counter the economic fallout from the fast-spreading coronavirus pandemic.
Describing the RBI's decisions, including lowering the repo rate, as progressive and timely, BJP President JP Nadda said that its announcements would help the middle class and give strength to the economy amid a 21-day nationwide lockdown to combat coronavirus.
This massive cut has brought down repo rate to 4.4%, which is the lowest ever.
The timing of RBI press conference justifiably built in expectations, but here the central bank has fallen short, says Mythili Bhusnurmath, Consulting Editor, ETNOW.
“Given this heightened volatility, unprecedented uncertainty and extremely fluid state of affairs, projections of growth and inflation would be heavily contingent on the intensity, spread and duration of COVID-19. Precisely for these reasons, the MPC refrained from giving out specific growth and inflation numbers,” Reserve Bank of India Governor Shaktikanta Das said.
In a January 31 release, the National Statistical Office (NSO) had revised down real GDP growth for FY19 to 6.1 per cent from 6.8 per cent provided in the provisional estimates of May 2019.
GoI and RBI have responded by notifying certain measures. Finance minister Nirmala Sitharaman announced compliance forbearance under different tax laws, including a few tax payment deadlines.
India is in the middle of a calamity. An extraordinary challenge requires an extraordinary response.
It is the central government, and its financier, the Reserve Bank of India. Sitharaman had budgeted for a generous fiscal deficit, and former RBI governor Urjit Patel had reluctantly promised to finance it.
As a special case, Standalone Primary Dealers (SPDs) were also allowed to participate in these auctions along with other eligible participants.
Industry experts point out that for all the companies last one month has hugely impacted cash flows and that has resulted in their mark to market. Extension of the financial year may spread the bad period over more months and could help companies recover a bit say experts.
The central bank will inject as much as ₹1 lakh crore in variable repo trades.
Budgetary announcements provide a thrust to the rural economy and also focus on measures to transform India
The measures aimed at countering coronavirus are mostly in the right direction but hugely inadequate, he says.
Even as it eased the rates, the RBI slashed growth estimates by an unprecedented 240 basis points since the rate cutting cycle began in February to a low of 5 per cent. The central bank's youngest Deputy Governor ever -- Viral Acharya -- quit six months before his three-year term was to end in June 2019.
The dollar swap auction pumped in $650 million out the $2 billion targeted.
India will have to achieve herd immunity to be able to fully counter covid, Swaminathan Aiyar has said.
In September, the central bank put the curbs on the cooperative bank for six months after finding financial irregularities such as under-reporting of bad loans.
The move followed the government announcing a Rs 1.7 lakh crore package on Thursday to put a safety net in place for those hit the hardest. India began a 21-day lockdown on March 25 to try and rein in the disease.
Money is not the real challenge. Rather, it is choosing the right policy levers and being very clear about policy objectives. All that monetary policy must do right now is to keep the credit markets unclogged. Boosting consumer spending should not be the goal.
Some very hard choices lie ahead for the finance minister-led economic response taskforce.
“It may be hard to prevent infections from spreading,”the former Reserve Bank of India Governor said.
The FM announced a slew of measures to ease the burden on the poor who will be hit hard by the lockdown.
Markets will operate only between 10 am and 2 pm in second and third weeks of April.
The govt should prioritise infra spending, especially on sectors highlighted in the report on NIP.
"On a review, it has been decided that the aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of Rs 50,00,000 provided that such investments of the lenders on P2P platforms are consistent with their net-worth," the RBI said in a notification.
States’ short-term borrowing limits have been increased by as much as 30% as they face pressure on revenues with economic activity coming to a halt and the transfers from the Central government also getting crushed due to lower Goods and Services Tax collection.
While announcing the observations and decisions of the Monetary Policy Committee's meet for December 2019, Governor Shaktikanta Das announced the unanimous decision to abstain from any more rate cuts till February. There have been many insightful observations on global financial situation and Indian economy. Watch!RBI Monetary Policy December 2019: Key takeaways
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