‘Financial landscape has deteriorated but light shines through,’ says RBI Governor

“It has been decided to reduce the fixed reverse repo rate under liquidity adjustment facility (LAF) by 25 basis points from 4% to 3.75%, with immediate effect,” Das announced.

“The RBI has been monitoring the situation very closely and we have been coming up with certain announcements every second or third day,” Das said.

Reserve Bank of India (RBI) Governor Shaktikanta Das made an address on Friday at a time when the country battles the coronavirus pandemic.

Das began his address by expressing his gratitude towards those in the frontline of helping the country battle the coronavirus pandemic. Das said he thought it was necessary for the RBI to convey its approach to the wider audience.

“The RBI has been monitoring the situation very closely and we have been coming up with certain announcements every second or third day,” Das said.

He said that banks and financial institutions have risen to the occasion.

Das quoted ‘father of the nation’ Mahatma Gandhi and said that light and hope persists amid death and darkness.

“Since March 27, 2020, when I spoke to you last, the macroeconomic and financial landscape has deteriorated in some areas but light shines through in some areas,” Das stated.

“Slivers of brightness encircle the gloom,” Das said.

Here are the top announcements made by Das in his address:

1. It has been decided to reduce the fixed reverse repo rate under liquidity adjustment facility (LAF) by 25 basis points from 4% to 3.75%, with immediate effect.

2. Banks not to make any further dividend payout in view of financial difficulties arising from Covid-19.

3. 90-day NPA norm not to apply on moratorium granted on existing loans by banks.

4. RBI will announce new measures to maintain adequate liquidity, facilitate bank credit flow, ease financial stress.

5. On April 14, International Monetary Fund (IMF) released its global growth projections revealing that in 2020, the global economy is expected to plunge into the worst recession since ‘The Great Depression’.

6. The IMF’s economic councillor has estimated the cumulative loss to global GDP over 2020-21 at around $9 trillion which is greater than the economies of Japan and Germany combined.

7. India is among the handful of countries that is projected to cling on to somewhat tenuously to positive growth at 1.9%. This is the highest growth rate among the G20e economies as estimated by the IMF.

8. International Monetary Fund projects sizable reshaped recoveries, close to 9 percentage points for the global GDP. India is expected to post a sharp turnaround & resume its Pre-COVID, pre-slowdown trajectory by growing at 7.4% in 2020-21.

9. Contraction in exports in March 2020 at 34.6%, turned out to be much more severe than during the Global Financial Crisis. However, amidst all this, the level of Forex Exchange Reserves which we have continues to be robust.

10. It has been decided to provide special refinance facilities for an amount of Rs 50,000 crores to National Bank for Agriculture & Rural Development, Small Industries Development Bank of India, and National Housing Bank to enable them to meet sectoral credit needs.