He announced a series of measures to ease liquidity pressure in the banking system and cushion the blow of COVID-19. Further, bank exposure to corporates has been raised to 30 per cent of the group's net worth from the current limit of 25 per cent, a move that will allow lenders to give larger loans to companies. Further, Das said government revenues have been impacted severely due to the slowdown in economic activity amid the pandemic.
The Reserve Bank on India (RBI) on Friday said India's gross domestic product (GDP) growth will be in negative territory in 2020-21 as the outbreak of coronavirus has disrupted economic activities. "Taking this into account, the deferment will be converted into funded interest term loan", the Governor said.
RBI is ready to use all its instruments to address the dynamics of an unknown future, says Shaktikanta Das. This makes it a six month moratorium.
RBI allocates Rs 15,000 crore to EXIM banks to avail U.S. dollar swap facility.
In order to alleviate difficulties being faced by exporters in their production and realisation cycles, the RBI has increased the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020. This will provide additional liquidity support to the MSME sector.
This address also comes before RBI's monetary policy committee is scheduled to meet from June 3 to June 5. He added that an improvement in passing on a lower rate to borrowers has been noticed across various business segments.
This will be his third press conference (the other two being on March 27 and April 17).
In April, the RBI had unexpectedly cut its key deposit rate to discourage banks from depositing idle funds with it and propel lending and boost the sluggish economy amid the coronavirus crisis.
There will be gradual revival of activity and demand by the second half of FY21, said RBI governor.
"The MPC is of the view that headline inflation may remain firm in the first half of 2020-21, but should ease in the second half, aided also by favourable base effects", Mr. Das said.
The Reserve Bank of India (RBI) has slashed its growth forecast for this financial year and warned of inflation uncertainties as the country's economy suffers due to the Covid-19 pandemic. A ray of hope is also brought in from the normal south-west monsoons this year, added Shaktikanta Das. He said that the world trade is likely to shrink by 13 to 32 per cent in the first quarter.
"The MPC voted unanimously for a reduction in the policy repo rate, and for maintaining the accommodative stance of monetary policy as long as necessary to revive growth [and] mitigate the impact of COVID-19, while ensuring that inflation remains within the target", RBI Gov. Shaktikanta Das said in a televised statement. This was done for past three days.