32 key highlights of RBI Governor Press conference dated 17.04.2020

32 key highlights of RBI Governor Press conference dated 17.04.2020

1.             RBI is acting proactively

RBI governor said that the RBI is doing everything to fight the epidemiological challenge that the world is facing.

2.            To ensure financial system, RBI staff is working, being staying away from family

RBI governor started his address by thanking RBI staff that has been working away to keep the financial system strong.

3.            Economic situation has worsened

The Economic situation has worsened since we last spoke, said RBI governor Das.

4.            India to cling on to some growth

India's growth rate is expected to be highest among G20 nations, as per IMF estimates: Shaktikanta Das

5.            Banks and other financial institutions have risen to the occasion: Das

Banks, financial institutions have risen to occasion to ensure normal functioning during outbreak of pandemic: RBI Governor

6.            Cumulative loss of $9 trillion to global GDP, estimated by IMF: RBI Governor

Emerging markets are coping with sharp volatility in financial markets & exchange rates, RBI governor says.

7.            India going through darkest moment

It is our darkest moment and we should focus on light. - RBI Governor Shaktikanta Das

8.           PMI contracted due to export hit

Services PMI contracted due to a sharp downturn due to export hit. 25-30% sharp decline in electricity demand due to virus, says Das

9.            Services PMI contracted due to a sharp downturn due to export hit

Services PMI contracted due to a sharp downturn due to export hit. 25-30% sharp decline in electricity demand due to virus, said Shaktikanta Das

10.       Banks have risen to the challenge by filling ATMs

Commending the job done by Banks, RBI Governor said that banks have been doing a good job in maintaining cash in ATMs.

11.          Contraction in exports much worse than in Global Financial Crisis

Contraction in exports at 34% has turned out to be much worse than in Global Financial Crisis, says RBI Governor Shaktikanta Das

12.        Financial conditions have improved owing to steps taken by RBI.

Financial conditions have improved, redemption pressure faced by mutual funds have moderated: Das

13.        India's growth is positive despite projection of global recession

India among a handful of countries that are projecting positive growth - RBI Governor

14.        RBI taking note of sectors that have had a problem reaching markets

RBI has targetted sectors that have face difficulty in accessing the market or don't have adequate liquidity.

15.        RBI to start TLTRO 2.0

TLTRO 2.0 will be started by the RBI, beginning with Rs 50,000 in tranches, to small and mid-size NBFCs and MFIs.

16.        RBI announces TLTRO of Rs 50,000 crores

RBI has decided for an aggregate amount of Rs 50,000 crore to begin in TLTRO, in tranches of appropriate sizes. - RBI

17.        TLTRO 2.0 started by RBI

Funds will be made available to small and mid-size firms and banks will have to disburse funds in a month's time. The amount of Rs 50,000 core can be increased, said Das.

18.       RBI's capital infusion in NABARD, SIDBI, and NHB

RBI has announced Rs 25,000 crore to NABARD; Rs 15000 crore to SIDBI for refinancing commercial banks, NBFCs, etc; and Rs 10,000 crore to NHB.  

19.        Banks must use 50% funds under TLTRO 2.0 to small and mid-size NBFCs

Under the new TLTRO 2.0, lenders have to allocate 50% of the funds to mid and small size NBFCs, said Das.

20.      RBI cuts reverse repo rate

Reverse repo rate cut by 25 basis points from 4 per cent to 3.75 per cent.

21.        Rs 6.9 lakh crore absorbed by RBI on April 15

Das announced that Rs 6.9 lakh crore absorbed by RBI on April 15 by means of reverse repo rate.

22.       RBI raises WMA limit for states

RBI increases WMA limits by 60 per cent, to plan their market borrowings better. The facility will be available till September 30.

23.       Reverse repo rate cut to 25 BPS to 3.75% from 4%

The RBI has cut Reverse repo rate by 25 BPS to 3.75%

24.       Reverse repo rate cut to encourage banks to lend

The cut in reverse repo rate is to encourage banks to lend more, said RBI Governor Shaktikanta Das.

25.       NPA classification will exclude the 3-month moratorium period

Non-performing classification will exclude moratorium period said RBI Governor.

26.       Banks must maintain 10% more provision

To maintain the bank's health, RBI said that the lenders will have to maintain 10% higher provisions on accounts, RBI governor Shaktikanta Das in his presser on Friday.

27.       NBFCs allowed to relax NPA classification for borrowers under moratorium

- Banks must invest 50 percent of funds under TLTRO-2 to small, mid-sized NBFCs

- Banks will be required to maintain additional provisioning of 10% on standstill accounts

- 90-day NPA norm not to apply on moratorium granted on existing loans by banks

- Banks and cooperative banks shall not make any dividend payouts until further notice

- Banks must provide more for accounts availing moratorium

Note: Scheduled commercial banks and other financial institutions are to make additional 20 percent provision. Due to the challenges of resolutions of accounts, period of resolution will be increased by (further) 90 days. Extension of resolution timeline for large accounts under default, additional provisioning of 20 percent is required for not implementing resolution in 180 days. Relaxing additional 20 percent will be provisioned under June 7 circular. Banks need to conserve capital and absorb losses. Banks will not make dividend payout from FY20 until further notice

28. Liquidity coverage ratio requirement for banks being brought down to 80% from 100% with immediate effect, says RBI

29. NBFCs can extend realty loans by 1 year if projects delayed on reasons beyond control: RBI

30. RBI Governor Shaktikanta Das says, “For 2020-21, International Monetary Fund 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% in 2020-21.

31. Activity in corporate bond market has picked up: RBI Governor

32. WMA limit increased by 60 per cent till September 30

Link: https://www.rbi.org.in/

Source: News/Press conference

DISCLAIMER: The article is based on the relevant provisions and as per the information existing at the time of the preparation. in no event i shall be liable for any direct and indirect result from this article. this is only a knowledge sharing initiative.

THE AUTHOR – CS Deepak Seth (Associate Partner at Helpinghands Professionals LLP) and can be reached at contacthhpro@gmail.com or 9910248911.