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RBI Governor Shaktikanta Das' press conference: Here are the main highlights from his address

RBI Governor Shaktikanta Das' press conference: Here are the main highlights from his address

RBI Governor Shaktikanta Das' press conference: Here are the main highlights from his address
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By CNBC-TV18 Apr 17, 2020 12:03:45 PM IST (Updated)

From rate cut to the state of the economy amid the coronavirus pandemic, here are the main highlights from RBI Governor Shaktikanta Das' press briefing today

RBI Governor Shaktikanta Das on Friday addressed the media amidst the steep fall in the rupee and the continuing volatility in other segments of the financial markets. This is the second time that the governor is addressing the media since the nationwide lockdown was imposed from March 25.

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Here are the main highlights from RBI Governor Shaktikanta Das' press briefing:
RBI has been proactive and has been monitoring the evolving situation. Das said the mission is to do whatever it takes to prevent the curve from steepening. The RBI Governor also thanked health workers, police staff and other service providers at the frontline of the fight against the deadly virus.
Economy: The RBI Governor said the macro-economic situation has deteriorated with the IMF saying that the global economy may plunge into the worst recession since the Great Depression. Das, however, added that light shines through in others. India is amongst the handful of countries to have positive GDP growth in FY21. The growth is projected to cling on to 1.9 percent, as per IMF.
Oil: Global financial markets remain volatile with crude oil prices in a state of flux despite production cuts by OPEC plus countries.
Growth: India expected to post a sharp turnaround in FY22 with 7.4 percent growth as per IMF. Pre-monsoon Kharif sowing has been aggressive while paddy production is up 37 percent in April versus last year. IMF forecasts a normal southwest monsoon with a rainfall expectation at 100 percent of the long term average. These developments bode well for rural demand, Das said. However, the impact of COVID-19 is not yet captured in IIP numbers.
Sectors, Exports: Automobile production and sale has declined sharply in March while Services PMI also declined into contraction in March 2020 due to falling exports. The contraction in exports in March at -34.6 percent is much more serious than during the GFC. Furthermore, there has been a sharp 25-30 percent decline in electricity demand due to the virus.
Forex: Amidst all this, the level of foreign exchange continues to be robust at $476.5 billion that is equivalent to 11.8 months of imports.
Liquidity: The RBI Governor said he is taking measures to ensure there is adequate liquidity in the system, facilitate bank inflows, enable the functioning of markets. He also said that payment infrastructure is working seamlessly. ATM operations stood at 91 percent of full capacity while adding that Rs 1,20,000 crores of fresh currency supplied to chests since March 1. From February 6 till March 27, the RBI had injected liquidity worth 3.2 percent of GDP. The systemic liquidity absorption at Rs 4.36 lakh crore during March 27-April 14.
TLTRO 2.0: The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the central bank would launch long-term repo operations (TLTROs) worth Rs 50,000 crore to help non-banking financial companies. The TLTRO 2.0 investments may be classified as HTM (held to maturity). Money raised via TLTRO-2 will be invested in grade bonds of NBFCs, he added. TLTRO auction of Rs 25,000 crore will be conducted on Friday, according to the RBI governor.
Rate Cut: RBI cuts reverse repo rate by 25 basis points to 3.75 percent from 4 percent earlier. The move has been taken to allow banks to lend more.
NPAs: RBI Governor also clarified that the entire moratorium period allowed by RBI will be excluded from the 90-day NPA cycle. However, to ensure the health of the financial system is also protected while allowing for these relaxations, RBI has asked banks to set aside an additional ten percent provisioning for all accounts where the standstill in asset classification is applied.
Real Estate & NBFCs: Like banks, RBI has now allowed the NBFCs to defer Date of Commercial Commencement of Operations (DCCO) of realty projects by one year if the delay for was genuine reasons outside the control of promoters.
Bank dividend: RBI has barred all scheduled commercial banks to make any dividend payout for the year ended March 2020 (the financial year 2019-2020) and will review it in the second quarter of FY21.
NABARD, SIBDI & National Housing Bank: RBI will provide a special refinancing facility of Rs 50,000 crore for the three institutions to enable them to meet sectoral credit needs. The NABARD will get Rs. 25,000 crore for refinancing regional rural banks (RRBs), cooperative banks and micro finance institutions (MFIs); SIDBI to get Rs. 15,000 crore for on-lending/refinancing; and Rs. 10,000 crore to NHB for supporting housing finance companies (HFCs).
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