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RBI announces fresh liquidity measures to bolster lockdown impact 2.0

The Reserve Bank of India (RBI) on Friday (17th April, 2020) announced additional measures to cushion the economy and maintain liquidity amidst the coronavirus lockdown.

  • RBI announces Long Term Repo Operations (LTRO) to conduct long-term repo operations--Rs 50,000 crore to begin with--in tranches of appropriate sizes. The move will boost the liquidity in the market
  • It also announced Rs 50,000 crore to national financial institutions such as NABARD, SIDBI and NHB
  • The central bank also slashed reverse repo rate by 25 basis points to 3.75% (Reverse repo rate is the rate at which the RBI borrows from the banks)
  • However, the repo rates remain unchanged
  • RBI also announced 60% more funds to the states to fight the lockdown
  • The RBI governor also said that the 90-day NPA norm would now not apply on moratorium granted on existing loans by banks
  • The loans given by NBFCs to real estate companies will also get similar benefit as given by scheduled commercial banks
  • In order to support banks, their liquidity capital ratio (LCR) requirements have been brought down to 80% from 100%
  • Banks have also been asked not to make any further dividend pay-out in view of the financial difficulties arising from COVID-19
  • RBI pegged India's GDP growth at 7.4 per cent in the next financial year 2021-22
  • Banks have been asked to figure out alternate business continuity plans amid the lockdown
Divya Patwal


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