• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Home
  • DOPT ORDERS 2020
  • FinMin Orders 2020
  • Railway Orders 2020
  • Contact Us

7th Pay Commission Latest news

Central Government Employees News

  • DOPPW Orders
  • 7th Pay Commission
  • Dearness Allowance
  • Dearness Relief
  • CSD Price List
  • Defence
    • Defence Pension
You are here: Home / News / RBI announces nine additional measures for strengthening the Economy

Trending
Central Government Holidays for the year 2021 – DOPT “hot”
Holidays List 2021 for Central Government Employees “hot”
AICPIN for the month of January 2021 “hot”
Freezing of Dearness Allowance & Dearness Relief till July 2021

RBI announces nine additional measures for strengthening the Economy

May 22, 2020 pcadmin Leave a Comment

RBI announces nine additional measures for strengthening the Economy

Cuts interest rates, extends moratorium by another 3 months

Exporters and Importers get More Liquidity

Domestic Economy to contract in 2020-21, revive gradually in the second half: RBI Governor

Mumbai | May 22, 2020

“It is when the horizon is the darkest and human reason is beaten down to the ground that faith shines brightest and comes to our rescue.”

RBI Governor Shaktikanta Das drew hope and inspiration from the 1929 statement of the Father of the Nation, as he announced yet another set of nine measures to smoothen the flow of finance and preserve financial stability in the turbulent and uncertain times ushered in by the COVID-19 pandemic. This follows the earlier sets of measures announced by RBI on April 17, 2020 and on March 27, 2020.

Making the announcements through an online address, the Governor stated that we must have faith in India’s resilience and capacity to overcome all odds. Expressing the confidence that we will together triumph over today’s traumatic trials, the Governor spoke with a sense of calling. He noted that the situation warrants that “central banks have to answer the call to the frontline in defence of the economy”.

Repo rate reduced by 40 basis points

The Governor has announced a reduction in major policy rates, in order to revive growth and mitigate the impact of COVID-19, while ensuring that inflation remains within the target. The repo rate has been reduced by 40 basis points from 4.4% to 4.0%. The Marginal Standing Facility rate and the Bank rate have been reduced from 4.65% to 4.25%. The reverse repo rate has been reduced from 3.75% to 3.35%.

 “Judging that the risks to growth are acute, while the risks to inflation are likely to be short-lived, the Monetary Policy Committee believes that it is essential now to instil confidence and ease financial conditions further. This will facilitate the flow of funds at affordable rates and rekindle investment impulses. It is in this context that the MPC voted to reduce the policy repo rate by 40 basis points from 4.4 per cent to 4.0 per cent” the Governor said.

Shri Das also announced a set of regulatory and developmental measures which he said complement the reduction in the policy rate and also strengthen each other.

He reiterated that the goals of the measures being announced are:

  • to keep the financial system and financial markets sound, liquid and smoothly functioning
  • to ensure access to finance to all, especially those that tend to get excluded by financial markets
  • to preserve financial stability

Measures to Improve the Functioning of Markets

  • Refinance Facility to SIDBI extended for another 90 days

In order to enable increased supply of affordable credit to small industries, the RBI had, on April 17, 2020, announced a special refinance facility of ₹15,000 crore to SIDBI at RBI’s policy repo rate for a period of 90 days. This facility has now been extended by another 90 days.

  • Relaxation of Rules for Foreign Portfolio Investment under Voluntary Retention Route

The VRR is an investment window provided by RBI to Foreign Portfolio Investors, which provides easier rules in return for a commitment to make higher investments. The rules stipulate that at least 75% of the allotted investment limit be invested within three months; considering the difficulties being faced by investors and their custodians, the time limit has now been revised to six months.

Measures to Support Exports and Imports

  • Exporters can now Avail Bank Loans for Higher Period

The maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks to exporters has been increased from the existing one year to 15 months, for disbursements made up to July 31, 2020.

  • Loan facility to EXIM Bank

The Governor has announced a line of credit of ₹15,000 crore to the EXIM Bank, for financing, facilitating and promoting India’s foreign trade. The loan facility has been given for a period of 90 days, with a provision to extend it by one year. The loan is being given in order to enable the bank to meet its foreign currency resource requirements, especially in availing a US dollar swap facility.

  • More time for Importers to Pay for Imports

The time period for import payments against normal imports (i.e. excluding import of gold/diamonds and precious stones/jewellery) into India has been extended from six months to twelve months from the date of shipment. This will be applicable for imports made on or before July 31, 2020.

Measures to Ease Financial Stress

  • Extension of Regulatory Measures by another 3 Months

The RBI has extended the applicability of certain regulatory measures announced earlier, by another three months from June 1, 2020 till August 31, 2020. These measures will now be applicable for a total period of six months (i.e. from March 1, 2020 to August 31, 2020). The aforesaid regulatory measures are: (a) 3-month moratorium on term loan instalments; (b) 3-month deferment of interest on working capital facilities; (c) easing of working capital financing requirements by reducing margins or reassessment of working capital cycle; (d) exemption from being classified as ‘defaulter’ in supervisory reporting and reporting to credit information companies; (e) extension of resolution timelines for stressed assets; and (f) asset classification standstill by excluding the moratorium period of 3 months, etc. by lending institutions. The lending institutions have been permitted to restore the margins for working capital to their original levels by March 31, 2021. Similarly, the measures pertaining to reassessment of working capital cycle are being extended up to March 31, 2021.

  • Provision to convert Interest on Working Capital into Interest Term Loan

Lending institutions have been allowed to convert the accumulated interest on working capital facilities over the total deferment period of 6 months (i.e. March 1, 2020 up to August 31, 2020) into a funded interest term loan, to be fully repaid during the course of the current financial year, ending March 31, 2021.

  • Increase of Group Exposure Limit to Increase Fund Flow to Corporates

The maximum credit which banks can extend to a particular corporate group has been increased from 25% to 30% of the bank’s eligible capital base. This has been done in order to enable corporates to meet their funding requirements from banks, in view of the current difficulties being faced by corporates in raising money from the markets. The increased limit will be applicable up to June 30, 2021.

Measures to ease financial constraints faced by State Governments

  • States allowed to borrow more from Consolidated Sinking Fund

The Consolidated Sinking Fund is being maintained by state governments as a buffer for repayment of their liabilities. The rules governing withdrawal from this Fund have now been relaxed, in order to enable states to enable them to repay their borrowings from the market, which become due in 2020-21. The change in withdrawal norms will come into force with immediate effect and will remain valid till March 31, 2021. The Governor added that the relaxation is being done, while ensuring that depletion of the Fund balance is done prudently.

Assessment of Economy

Presenting an assessment of the global economy, the Governor said that the macroeconomic and financial conditions are austere by all counts. He stated that the global economy is headed inexorably into a recession.

The domestic economy too has been severely impacted by the two-month lockdown, said the Governor. “The top 6 industrialised states that account for about 60 per cent of industrial output are largely in red or orange zones.” Demand has collapsed, production has come down, taking a toll on fiscal revenues. Private consumption has been dealt a severe blow.

The Governor said that agriculture and allied activities have provided a beacon of hope, amidst this encircling gloom. A ray of hope also comes from the forecast of a normal southwest monsoon in 2020 by the India Meteorological Department.

The Governor recalled that based on the incomplete data made available, food inflation, which had come down from its January 2020 peak for the second successive month in March, suddenly reversed and increased to 8.6% in April as supply disruptions took their toll, despite the current reduction in demand. India’s merchandise exports and imports suffered their worst slump in the last 30 years as COVID-19 paralysed world production and demand.

The Governor informed that the Monetary Policy Committee assessed that the inflation outlook is highly uncertain. The supply shock to food prices in April may persist for the next few months, depending upon the state of lockdown and the time taken to restore supply chains after relaxation. The elevated level of pulses inflation is worrisome, and warrants timely and swift supply management interventions, including a reappraisal of import duties.

Speaking of the road ahead for the economy, the Governor noted that the combined impact of demand compression and supply disruption will depress economic activity in the first half of the year. Assuming that economic activity gets restored in a phased manner, especially in the second half of this year, and taking into consideration favourable base effects, it is expected that the combination of fiscal, monetary and administrative measures being currently undertaken would create conditions for a gradual revival in activity in the second half of 2020-21.

Given all these uncertainties, GDP growth in 2020-21 is estimated to remain in negative territory, with some pick-up in growth impulses from H2: 2020-21 onwards. Much will depend on how quickly the COVID curve flattens and begins to moderate.

The full statement by the Governor can be read here.

Filed Under: News

Also Read

EPFO extended social security benefits to the subscribers of J&K and Ladakh

EPFO extended social security benefits to the subscribers of J&K and Ladakh

March 4, 2021 By pcadmin Leave a Comment

EPFO extended social security benefits to the subscribers of J&K and Ladakh CBT meet on 4th March, first time in Srinagar after extension EPF Act in the UTs Consequent upon implementation of EPF & MP Act, 1952 in the UTs of J&K and Ladakh w.e.f. 31st October, 2019, EPFO has extended … [Read More...] about EPFO extended social security benefits to the subscribers of J&K and Ladakh

Code On Wages (Central Advisory Board) Rules, 2021

Code On Wages (Central Advisory Board) Rules, 2021

March 4, 2021 By pcadmin Leave a Comment

Code On Wages (Central Advisory Board) Rules, 2021 MINISTRY OF LABOUR AND EMPLOYMENT NOTIFICATION New Delhi, the 1st March, 2021 G.S.R. 143(E).—Whereas the draft of certain rules which the Central Government proposes to make, in exercise of the powers conferred by sub-section (1) of section 67 … [Read More...] about Code On Wages (Central Advisory Board) Rules, 2021

Income Tax

Clarification in respect of residency under Income-tax Act, 1961

March 4, 2021 By pcadmin Leave a Comment

Clarification in respect of residency under Income-tax Act, 1961 The Central Board of Direct taxes (CBDT) has received various representations requesting for relaxation in determination of residential status for previous year 2020-21 from individuals who had come on a visit to India during the … [Read More...] about Clarification in respect of residency under Income-tax Act, 1961

Extension of CGHS facilities to beneficiaries outside India.

Extension of CGHS facilities to beneficiaries outside India.

March 4, 2021 By pcadmin Leave a Comment

Extension of CGHS facilities to beneficiaries outside India. File NO.S.1103011/2021-EHS (by E-mail) Government of India Ministry of Health & Family Welfare Department of Health & Family Welfare (EHS Section) Dated, the 02nd March, 2021 Nirman Bhawan, New Delhi To Shri T.K. … [Read More...] about Extension of CGHS facilities to beneficiaries outside India.

Regularization of absence during COVID-19 pandemic lockdown period

Regularization of absence during COVID-19 pandemic lockdown period – DOPT

March 3, 2021 By pcadmin Leave a Comment

Clarification on regularization of absence during COVID-19 pandemic lockdown period - DOPT O.M No. 13020/1/2019-Estt(L) dated 01.03.2021 No. 13020/1/2019-Estt(L) Government of India Ministry of Personnel, Public Grievances and Pensions Department of Personnel & Training Old JNU Campus, … [Read More...] about Regularization of absence during COVID-19 pandemic lockdown period – DOPT

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

All About Pension

All about Pension

Latest DOPT Orders

Regularization of absence during COVID-19 pandemic lockdown period – DOPT

Modernization of Non-Statutory Departmental Canteens located in Central Government Offices : DOPT

Swachh Bharat Mission-Departmental Canteens

Opening of Departmental Canteens in Central Government Offices.

Government servants at all levels are to attend office on all working days without any exemption to any category of employees

Latest Finmin Orders

Rate of interest for purchase of Computer during 2021-22 – FINMIN

Clarification on Cash Management Guidelines – FINMIN

Clarification regarding Special Cash Package equivalent in lieu of LTC Fare for CG Employees during the block 2018-21

CGEGIS 1980 – Table of Benefits from Jan to March 2021

One time relaxation in Transport Allowance during COVID-19 pandemic – FINMIN

Latest Railway Orders

Conveyance Allowance at revised rates to Railway Medical Officers

Holidays to be observed in Central Government Offices during the year 2021: Railway Board Order

Grant of disability pension, comprising service element and disability element to pre-2006 disability pensioners

Re-classification of cities for the purpose HRA to Railway Employees

33% of Railways Officers and staff attend office with staggered timings

Categories

Copyright © 2021