Economy is on a standstill in lockdown: RBI  

As the economy is under continuous downfall due to the Covid-19, RBI has made announcements to control the damage

RBI has announced targeted long term repo operations and special refinance to financial institutions like NABARD, SIDBI and National Housing Bank.

Targeted long-term repo operations (TLTRO 2.0) for an aggregate amount of ₹50,000 crore have been announced by the RBI

This will comprise ₹25,000 crore to NABARD for refinancing regional rural banks, cooperative banks and micro finance institutions

RBI announced ₹15,000 crore to SIDBI for on-lending/refinancing and ₹10,000 crore to NHB for supporting housing finance companies

RBI Governor Shaktikanta Das said , banks should deploy these funds in investments with at least 50% of the total amount going to small and mid-sized NBFCs and MFIs.

RBI governor assured  that there has been significant surplus liquidity in the banking system

The fixed rate reverse repo has been reduced by 25 bps to 3.75% — to discourage banks to park surplus funds with RBI.

RBI said the step was taken to to encourage banks to deploy the surplus funds in investments and loans in productive sectors of the economy.

It has decided to increase the WMA limit of states by 60 per cent  as on March 31, the increased limit will be available till September 30, 2020.

RBI governor said that the economy is on a standstill due to the lockdown hence the banks are being provided some asset quality relief.

For all accounts which lenders decided to grant moratorium, RBI said, there would be an asset classification standstill from March 1, 2020 to May 31, 2020.

RBI has said that banks will maintain sufficient buffers and remain adequately provisioned to meet future challenges

They will have to maintain higher provision of 10% on all such accounts under the standstill, spread over two quarters, i.e., March, 2020 and June, 2020.

These provisions can be adjusted later on against the provisioning requirements for actual slippages in such accounts,” RBI said.

RBI also said  commercial banks and cooperative banks shall not make any further dividend payouts from profits until further instructions.

The regulator has also brought down the liquidity coverage ratio requirement for Banks from 100 to 80 per cent with immediate effect.

Mr.Das said, the payment infrastructure is running seamlessly and the ATM operations stood at over 91 per cent of full capacity.

"RBI has supplied fresh currency of ₹1.2 lakh crore from March1 till April 14, 2020 to currency chests

Banks have risen to the occasion by refilling ATMs regularly, despite logistical challenges,” Mr. Das said.