Key Highlights from RBI Press Meet
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Key highlights from RBI press meet
RBI is monitoring the situation very closely and has been and will continue to make changes as and when required
Key steps taken
A) to provode adequate liquidity in system
✅ Development of funds has been to large corporates and PSU entities, but impact has been more on small corporates. Thus undertake TLTRO 2.0, for an INR500bn ( to begin with) the funds will be invested in NBFCs with 50% to the mid sized, small sized NBFCs and MFI - this has to be done within 1 month of availmemt - this will be under HTM for banks
✅ refiance through NBARD, SIDBI and NHB - to proved special refiance for INR500bn to enable them to meet sectoral credit needs ( NABARD - INR250bn, SIDBI - INR150bn and balance to INR100bn) - additional requirement if any by them may be met by RBI. The advances will be charged at repo rate.
✅ LAF , the bank is sitting on higher liquidity ( on April 15th RBI absorbed INR6.9tn) , thus reverse repo is further reduced to 25bps to 3.75% other policy rates remains same
✅ the WMA limit has been increased for states by 60% to plan there market borrowing program better over period of time. This will be available till September 2020.
B) To facilitate bank credit
regulatory measures to reduce financial stress
✅ asset classification- 90 day classification will exclude the moratorium period . The bank will.have to maintain additional 10% provisions on these standstill accounts over next 2 quarters these provisions can later be adjusted against the provision requirement for slippage requirement.
✅ extention of resolution timeline- in case of large accounts under default an additional provision of 20% required if not completed in 210 days, recognition the challenges further 90dyas has been added for resolution
✅ divided - the SCB shall not make any dividend payout for FY20,- this will be reviewed in Q2Fy21
✅ for LCR - it has been lowered to 80% from 100% from immediate effect - this will be ramped up in phased manner 1st october 2020 90% and 100% by FY22
✅NBFC loans to CRE projects extend 1 year moratorium without change in classification - this will benefit both NBFC and real estate segment
Other highlights
✅ Payment infrastructure is running efficiently/seamlessly, there is no downtime on internet banking etc.
✅ Forex reserves stands at USD476.8bn
✅undertook 3 LTROs and one more will be done today of INR250bn
First cut view- These are second such strong measures taken by RBi addressing most of the industry concerns especially on NBFCs ( those were struggling with liquidity) also real estate segment.
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