RBI governor Shaktikanta Das brought up a list of measures to facilitate liquidity and bank credit, compensate for the economic stress the country’s been facing and enabling normal functioning of the market, today.
Shaktikanta Das declared that a sum of Rs. 50,000 crore special SHAKTIKANTA finance facility to be provided to Small Industries Development Bank of India (SIDBI, Rs 15,000 crore), National Housing Bank (NHB, Rs 10,000 crore) and National Bank for Agriculture and Rural Development (NABARD, Rs 25,000 crore), adding that the surplus capital will help enable the refinance the commercial banks and housing finance banks to infuse liquidity into the market. In another major announcement, similar benefits will be given to loans given by NBFCs to real estate companies as given by scheduled commercial banks.
The RBI said that it will conduct SHAKTIKANTA targeted long-term repo operations (TLTRO) 2.0 worth Rs 50,000 crore, which can be further increased to benefit NBFCs and micro-financial institutions. To encourage states for adequate borrowing, the RBI has also increased WMA limits by 60%, so that they can plan their market borrowings better. This facility is available until September 30. The RBI has also asked all banks to not make any dividend payments to shareholders because of the ongoing financial crisis.
An actual breather for the v real sector, today at 14:26 IST, Farshid Coopers, Managing Director of Spenta Corporation said that “Revising the reserve repo rate to 3.75% will promote the banks to infuse liquidity parked with them into the market thereby easing the liquidity. The Real estate Industry which has been cash strapped for more than a year now can expect a breather as loans given by the NBFCs for will not be classified as NPA even on non-repayment for a period of 1 year.”
Also, at 14:21 IST today, 17th April 2020 it was SHAKTIKANTA announced that RBI’s announcement will give borrowers and lenders breathing space to stabilize from unexpected financial challenges. The MD and CEO of LIC Housing Finance, Siddhartha Mohanty said that “along with the reduction in repo rate cut it has been announced that the NPA classifications will exclude the three-month moratorium period till May-end, which again is a welcome measure. Hopefully, this will further give borrowers and lenders breathing space to stabilise from the unexpected financial and psychological jolt out of this pandemic. The announcement today is a step towards diminishing the coronavirus impact on the economy and ensuring the normal functioning of financial markets.”