RBI Governor Shaktikanta Das Announces Rs 50,000 Crore Boost For Financial Institutions

Reserve Bank of India Governor Shaktikanta Das. on Friday said that the International Monetary Fund’s projection of 1.9 per cent GDP growth for India is highest among G20 nations and that the country is expected to post a sharp turnaround in 2021-22.

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.

He further said surplus liquidity in the banking system has increased substantially as result of central bank’s actions.

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

“For 2020-21, IMF 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,” he added.

Addressing through a video conference, Das said that the RBI is monitoring the situation developing out of Covid-19 outbreak. He said banks, financial institutions have risen to occasion to ensure normal functioning during the outbreak.

“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 has been very proactive and monitoring the situation closely,” the RBI Governor said.

Das also pointed out that automobile production, sales declined sharply in March and electricity demand has fallen sharply

“Contraction in exports in March was at 34.6 per cent — much more severe than global financial crisis of 2008-09,” said RBI Das.

Das said the RBI will announce new measures to maintain adequate liquidity in system, facilitate bank credit flow and ease financial stress.

(With agency inputs)