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<keyword id="7268643" type="UNKNOWN" weightage="20" keywordseo="rbi-governor-shaktikanta-das">RBI Governor Shaktikanta Das</keyword> has emhasised that although there is headroom for further monetary policy action, the "arsenal" has to be kept dry and used judiciously for promoting growth which has been hit hard by the COVID-19 pandemic, according to the MPC minutes released on Thursday. <div type="Article" hostid="261" msid="77388568" title="RBI brings in KV Kamath to set the boundaries for a one-time restructuring of loans" mstype="2" mssubtype="0"></div> After a three-day brainstorming earlier this month, all the six members of the Das-headed Monetary Policy Committee (MPC) had opted for a status quo and left interest rates unchanged. However, the MPC maintained an accommodative stance, implying more rate cuts in future if the need arises to support the coronavirus-hit economy. <div type="Article" hostid="261" msid="77387591" title="‘Watchful’ RBI leaves repo rate unchanged to keep inflation in check" mstype="2" mssubtype="0"></div> As per the minutes, Das also said it would be prudent at this stage to wait for a firmer assessment of the outlook for growth and inflation. "It would be prudent at this stage to wait for a firmer assessment of the outlook for growth and inflation as the staggered opening of the economy progresses, supply bottlenecks ease and the price reporting pattern stabilizes," Das said. The Governor noted that low capacity utilisation amid subdued domestic and external demand is likely to delay early revival of investment demand. Real GDP is likely to shrink in the first half of the year, and growth for the full year 2020-21 is estimated to be negative, he said. Generalised inflationary pressures across food and Consumer Price Index (CPI) excluding food and fuel, in a situation where growth is expected to contract sharply, is a matter of serious concern, Das added. "As I have been reiterating since October 2019, monetary policy is geared towards supporting the economic recovery process. Although there is headroom for further monetary policy action, at this juncture it is important to keep our arsenal dry and use it judiciously," he said. He also felt that "we should wait for some more time" for the cumulative 250 basis points reduction in policy rate since February 2019 to seep into the financial system and further reduce interest rates and spreads. Cautioning that outlook for the economy was grim, RBI Deputy Governor and MPC member Michael Debabrata Patra opined that even when it improves, the expectation is one of slow, hesitant recovery, with the situation likely to worsen before it gets better. The upticks that easing of lockdowns yield are likely to be ephemeral and vulnerable to flattening out due to lack of underlying vigour, he said. A durable revival of the economy depends on sustained policy support to resuscitate activity in various sectors, restore employment, ease financial stresses facing households, businesses and financial intermediaries, instil confidence and anchor financial stability before it slips away, he said. RBI Executive Director Mridul K Saggar said the recovery path is inextricably linked to the course the pandemic might take and complete normalisation will be difficult till it is overcome. External member on the rating setting panel, Ravindra H Dholakia said there are high uncertainties regarding the macroeconomic environment, adding that he was sceptical about the deep stagflationary conditions prevailing in the country. "Although the present circumstances are truly exceptional, the primary mandate given to MPC for inflation targeting at 4 percent with the upper tolerance limit of 6 percent has to be respected," said Dholakia. MPC member Pami Dua was of the view that at this juncture, it is best to adopt a wait and watch strategy and look at incoming data to assess the evolving macroeconomic situation. "I therefore vote to keep the policy rate unchanged and to continue with an accommodative stance as long as necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target, going forward," Dua said. External member Chetan Ghate said he has been advocating a more cautious path for policy rate reductions since February 2019. "However, I have been in a minority in the MPC. Inflation has now been above the upper band of 6 per cent for a number of months. Notwithstanding large rate cuts to spur growth over the last year and a half, growth has steadily declined despite 250 bps in cuts since February 2019," Ghate said. Future MPC meetings should not go soft on inflation, he added. The next MPC meeting is scheduled to held during September 29 to October 1, 2020. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbi-governor-shaktikanta-das-leaves-repo-rate-unchanged-to-check-inflation/articleshow/77387591.cms">‘Watchful’ RBI leaves repo rate unchanged to keep inflation in check</a> <a href="https://www.businessinsider.in/finance/banks/news/one-time-loan-restructuring-dilemma-rbi-wont-commit-and-india-inc-wont-stop-asking-for-it/articleshow/77328145.cms">One-time loan restructuring dilemma - RBI won’t commit, and India Inc won’t stop asking for it</a> <a href="https://www.businessinsider.in/finance/news/rbi-brings-in-kv-kamath-to-set-the-boundaries-for-a-one-time-restructuring-of-these-loans/articleshow/77388568.cms">RBI brings in KV Kamath to set the boundaries for a one-time restructuring of loans</a>

RBI Governor wants keep India's monetary war chest dry for future use

<ul><li><keyword id="6357120" type="General" weightage="100" keywordseo="paytm" source="Orion">Paytm</keyword> said <keyword id="1426939" type="General" weightage="80" keywordseo="ppsl" source="Orion">PPSL</keyword> has now received a letter from <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> in response to an application for the authorisation to provide PA services for online merchants.</li><li>Paytm, in the regulatory filing, said it can resubmit the PA application within 120 calendar days.</li><li>The company will not onboard new online merchants till the time approvals remain pending.</li></ul> Banking regulator RBI has put a pause on onboarding of online merchants by <keyword id="12003494" type="General" weightage="50" keywordseo="paytm-payments-services" source="Orion">Paytm Payments Services</keyword>, even as the company said it will have no material impact on its business, according to a regulatory filing. One97 Communications (OCL), which owns the Paytm brand, had proposed to transfer the payment aggregator services business undertaken by it to Paytm Payments Services (PPSL) in December 2020 to comply with payment aggregator (PA) guidelines of the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) but the banking regulator had rejected its application. The company had re-submitted the required documents in September 2021. Paytm said PPSL has now received a letter from RBI in response to an application for the authorisation to provide PA services for online merchants. As per the letter, PPSL is required to "Seek necessary approval for past downward investment from the company into PPSL, to comply with FDI Guidelines" and "not onboard new online merchants". Paytm, in the regulatory filing, said it can resubmit the PA application within 120 calendar days. The company will not onboard new online merchants till the time approvals remain pending. PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own. According to RBI's PAs guidelines, a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business. Paytm further said there were no material observations from RBI and the move has no material impact on its business and revenues since the communication from the central bank is applicable only to onboarding of new online merchants. "We can continue to onboard new offline merchants and offer them payment services including All-in-One QR, <keyword id="10896801" type="General" weightage="50" keywordseo="soundbox" source="Orion">Soundbox</keyword>, <keyword id="3885098" type="General" weightage="50" keywordseo="card-machines" source="Orion">Card Machines</keyword>, etc. Similarly, PPSL can continue to do business with existing online merchants, for whom the services will remain unaffected. We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application," Paytm said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/over-50-of-microbusinesses-had-no-mechanisms-to-cushion-covid-impact-road-to-recovery-report-says/articleshow/95780667.cms">Over 50% of microbusinesses had no mechanisms to cushion Covid impact, Road to Recovery report says</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/elon-musk-may-produce-alternative-smartphones-to-compete-with-apple-android/articleshow/95780494.cms">Elon Musk may produce 'alternative' smartphones to compete with Apple, Android</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/india-sees-a-single-day-rise-of-new-389-coronavirus-infections-tally-rises-to-530608/articleshow/95779680.cms">India sees a single-day rise of new 389 coronavirus infections, tally rises to 5,30,608</a>

RBI pauses onboarding of online merchants by Paytm Payments Services; firm says no material impact on biz

Mumbai, Apr 28 () The Reserve Bank of India (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>) on Tuesday said its employees have decided to contribute salary of one or more days totalling Rs 7.30 crore towards the <keyword id="8972742" type="UNKNOWN" weightage="20" keywordseo="pm-cares-fund">PM-CARES Fund</keyword>. To help people affected by any kind of emergency or distress situation like the one posed by the COVID-19 pandemic, the government has set up a public charitable trust named Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES Fund) to receive contributions from various sources, the central bank said in a statement. "Responding to the call to support this noble cause, the employees of the Reserve Bank have decided to contribute one or more days salary to the PM-CARES Fund," the RBI said. The total contribution from the employees amounting to Rs 7.30 crore is being remitted to the PM-CARES Fund, it said. The COVID-19 pandemic and the related dislocation in normal economic activity have severely affected economically weaker sections of the society and their means of livelihood.

RBI employees contribute Rs 7.30 cr to PM-CARES Fund

<ul><li>The RBI has been regularly conducting the survey to elicit subjective views of the households on price movement across various cities of the country. </li><li>The results of the survey are used as inputs for the monetary policy. </li><li>The July 2020 round of the Inflation Expectations Survey of Households has been launched, the central bank said in a release on Tuesday.</li></ul>The Reserve Bank of India has launched the inflation expectations survey of households and responses of the participants will be gathered over telephone in view of the <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">coronavirus</keyword> pandemic. The RBI has been regularly conducting the survey to elicit subjective views of the households on price movement across various cities of the country. The results of the survey are used as inputs for the monetary policy. The July 2020 round of the Inflation Expectations Survey of Households has been launched, the central bank said in a release on Tuesday. Hansa Research Group, Mumbai has been engaged to conduct the survey of this round on behalf of the RBI over telephone instead of the regular personal interview mode in view of the pandemic. "For this purpose, the selected households will be approached by the agency and they are requested to provide their response over telephone," the release said. The survey aims at capturing subjective assessments on price movements and inflation, of approximately 6,000 households, based on their individual consumption baskets, across 18 cities. The cities that would be covered are Ahmedabad, Bengaluru, Bhopal, <keyword id="50863" type="LOCATION" weightage="20" keywordseo="Bhubaneswar">Bhubaneswar</keyword>, <keyword id="6360078" type="LOCATION" weightage="20" keywordseo="chandigarh">Chandigarh</keyword>, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, <keyword id="6355192" type="LOCATION" weightage="20" keywordseo="Lucknow">Lucknow</keyword>, Mumbai, Nagpur, Patna, Raipur, Ranchi and <keyword id="6357416" type="LOCATION" weightage="20" keywordseo="thiruvananthapuram">Thiruvananthapuram</keyword>. The survey would seek qualitative as well as quantitative responses from households on price changes -- general prices as well as prices of specific product groups -- for the three months ahead as well as in the one year ahead period, as per the release. In the wake of the pandemic, the government released truncated retail inflation data for April and May. The RBI would also conduct July 2020 round of Consumer Confidence Survey (CCS) to seek qualitative responses from households, regarding their sentiments on general economic situation, employment scenario, price level, households' income and spending. The survey, which would also be done over telephone, would cover approximately 5,400 respondents across 13 cities. Findings from both the surveys, which are conducted on a regular basis, are used by the RBI while deciding the monetary policy. NKD CS RAM

Expect a call from RBI as an inflation survey is underway

New Delhi, Mar 27 () A slew of measures announced by the RBI on Friday would help mitigate the impact of coronavirus-related lockdown on businesses, the industry said. The industry said that the steps would help push lending rates down, encourage banks to infuse money into productive sectors, infuse liquidity and address the financial stress in the system. The RBI on Friday allowed banks to put on hold EMI payments on all term loans for three months and cut interest rate by the steepest in more than 11 years as it joined the government efforts to rescue a slowing economy that has now got caught in coronavirus whirlwind. The Reserve Bank of India (RBI) cut repo to 4.4 per cent, the lowest in at least 15 years. Also, it reduced the cash reserve ratio maintained by the banks for the first time in over seven years. CRR for all banks was cut by 100 basis points to release Rs 1.37 lakh crore across the banking system. "The current situation in the economy and financial markets is extremely fragile and it required a massive dose of monetary stimulus to be injected at the earliest. The RBI has done just that. This should help lift the spirit of economy, " Ficci President Sangita Reddy said. "This, together with a host of other measures to boost liquidity will address the financial stress in the system on account of the COVID-19 outbreak and the consequent lockdown. The substantial reduction in the CRR will help banks to reduce their lending rates and aid monetary transmission, " CII Director General Chandrajit Banerjee said. Assocham President Niranjan Hiranandani said these measures, including reducing the cost of borrowing and reduction in the CRR would ensure India's financial stability at a time when there is heightened volatility in the global financial markets, with a desperate rush towards security. Cyril Shroff, Managing Partner at Cyril Amarchand Mangaldas said: "The RBI has unleased a bazooka to deal with the economic pain and uncertainty prevailing in the wake of the COVID crisis. Acting swiftly and decisively, the RBI has used several levers to increase liquidity in the system". PHD Chamber President D K Aggarwal said these measures will provide adequate liquidity in the system, bring down the cost of capital and mitigate the impact of pandemic COVID-19. The reverse repo rate was cut by 90 bps to 4 per cent, creating an asymmetrical corridor. RBI Governor Shaktikanta Das predicted a big global recession and said India will not be immune. It all depends how India responds to the situation, he said. Global slowdown could make things difficult for India too, despite some help from falling crude prices, Das said, adding food prices may soften even further on record crop production. Aggregate demand may weaken and ease core inflation further, he noted. After cutting policy rates five times in 2019, the RBI had been on a pause since December in view of high inflation. The measures announced come a day after the government unveiled a Rs 1.7 lakh crore package of free foodgrains and cash doles to the poor to deal with the economic impact of the unprecedented 21-day nationwide lockdown. While the Monetary Policy Committee (MPC) of the RBI originally was slated to meet in the first week of April, it was advanced by a week to meet the challenge of coronavirus. RSN MR

RBI steps to help mitigate impact of coronavirus lockdown on biz: Industry

New Delhi, Mar 27 () Prime Minister Narendra Modi on Friday said the Reserve Bank of India (RBI) had taken giant steps to safeguard the economy from the impact of the coronavirus.The RBI cut the benchmark interest rate by 75 basis points to 4.4 per cent on Friday to deal with the hardship caused due to the outbreak of COVID-19."The announcements will improve liquidity, reduce cost of funds, help middle class and businesses," Modi wrote on Twitter. NAB RC

RBI announcements to safeguard economy from impact of coronavirus: PM Modi

New Delhi, Mar 4 () The RBI needs to find room for more rate cuts to deal with the impact of coronavirus on the economy, says IDFC Mutual Fund report. The report titled 'The Coronavirus and Revealed Preferences' further said the RBI, on its part, has a dominant revealed current preference for bringing back credit growth. "Again the revealed preference in MPC (on aggregate, not necessarily for each individual member) seemed to be to look for room to ease as soon as inflation allowed, even before the impact from the coronavirus had taken hold. With new evolving information, the nudge is likely to come sooner than before," the report said. It is also noteworthy that the central bank chose to put out an assurance statement with respect to evolving developments, despite already being in the midst of substantial incremental non-traditional monetary easing, the statement said. "All of this means that monetary policy, conventional and otherwise, will continue to play a pivotal role for now with consequent benefits for quality interest rates," it added. The report pointed out that the finance minister's revealed preference is also similar to that of the RBI, i.e to get credit growth to rebound. "This is also basis a recognition that scope for incremental fiscal response has been somewhat limited given the well documented constraints. "In fact this space may get even further constrained if lack of growth buoyancy stresses tax growth and tepid financial markets stress capital receipts targets," it said. The report, however added that it is unlikely that the government will compromise on spending to meet the fiscal deficit targets. Noting that the global monetary policy will continue to be extremely supportive, it said in India too, the RBI's revealed preference will get a further leg up and conventional easing may start supporting unconventional tools already in deployment. "Indeed the swap market is already pricing the next 40-50 basis points of repo rate cuts," it said. The US Federal Reserve on Tuesday cut interest rate by 50 basis points to deal with coronavirus. The virus has spread to over 60 countries and killed more than 3,100 people since its outbreak in the Chinese city of Wuhan in December. Over 90,000 have been infected. BKS CS BKS ANUANU

RBI needs to find room for rate cut to deal with impact of coronavirus

Mumbai, Mar 3 () The Reserve Bank on Tuesday said it is closely monitoring global as well as domestic situation regarding the impact of deadly coronavirus and ready to take necessary action to ensure orderly functioning of financial markets.Globally, financial markets have been experiencing considerable volatility, with the spread of coronavirus, triggering risk-off sentiments and flights to safe haven, the Reserve Bank of India (RBI) said in a statement.Spillovers to financial markets in India have largely been contained. Growing hopes of coordinated policy action to mitigate a broader fallout to economic activity has boosted market sentiment today."The Reserve Bank of India is monitoring global and domestic developments closely and continuously and stands ready to take appropriate actions to ensure orderly functioning of financial markets, maintain market confidence and preserve financial stability," it said.The outbreak of coronavirus and subsequent spread to geographies across the world has adversely affected the financial markets.Meanwhile, the government has issued a travel advisory, suspending all regular visas/e-visas granted on or before March 3 to nationals of Italy, Iran, South Korea, Japan who have not yet entered India, a day after two fresh cases of coronavirus was reported in the country. NKD CS BAL

Monitoring coronavirus impact on financial markets, ready to take action: RBI

<ul><li>Former <keyword id="64190" type="POSITION" weightage="20" keywordseo="RBI-Governor">RBI governor</keyword> <keyword id="6358908" type="DEFINITION" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> believes that the government’s top priority should be allocating financial resources towards medical supplies required to fight the <keyword id="8829783" type="UNKNOWN" weightage="20" keywordseo="coronavirus-pandemic">Coronavirus pandemic</keyword>.</li><li>He told India Today in an interview that the second priority should be providing assistance to <keyword id="6903191" type="UNKNOWN" weightage="20" keywordseo="poor-households">poor households</keyword>.</li><li>Only when those two things are taken care of should the government think about introducing a monetary or fiscal stimulus to help the economy, Rajan said.</li></ul>Former RBI governor Raghuram Rajan believes that the government’s top priority should be procuring medical supplies to fight the <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">Coronavirus</keyword> pandemic. He said that no expense should be spared in its battle to control the spread of Covid-19. “We need to spend money on medical supplies, ventilators, and masks — on getting protective equipment for medical workers. This means getting resources from private, public, defence, retirement — every resource — and quickly,” Rajan said speaking to India Today. . Rajan explained that even though temporary income support would make sense, the government’s resources are already very limited. “This is not the time to discuss that,” he said about a possible economic and monetary stimulus that the economy might need. However, the finance minister Nirmala Sitharaman on March 24 said that an economic stimulus package would be announced “sooner than later”. She also announced a list of compliances that have been relaxed including delaying IT return filing et cetera. As per Rajan’s list of priorities, the second step should be to address the marginalised sections of the community. Making sure that the livelihoods of poor households — both rural and urban — have enough to sustain themselves. Only when these two critical issues have been addressed, should the government allocate finances towards fixing the economy, according to Rajan. How should the government handle the Coronavirus’ impact on the <keyword id="6356076" type="DEFINITION" weightage="20" keywordseo="indian-economy">Indian economy</keyword>? According to Rajan, everyone is looking at China right now to see if their preventive measures against the spread of Coronavirus will hold. It has already reported a dip of 10% in its GDP during the first quarter. The estimates for Europe and the US also indicate a double-digit fall during the second quarter. When it comes to India, it’s important to make sure that the temporary pandemic shock on the economy doesn’t become a permanent feature, according to Rajan. The downturn of the economy leads to a slowdown in cash flow and takes away the income of workers. He points out that if this carries on for long enough, it could lead to substantial layoffs and firms closing down. “When the Coronavirus is under control, there won’t be a lot of economic activity because those businesses won’t start up again,” said Rajan. He said that even though the government can’t necessarily offer financial support — it can offer partial guarantees and incentivise banks to continue extending credit. See also: <a href="https://www.businessinsider.in/finance/news/no-minimum-balance-use-any-atm-all-the-changes-for-bank-customers-in-india-amidst-coronavirus-related-lockdown/articleshow/74791418.cms">No minimum balance, use any ATM⁠— all the changes for bank customers in India amidst Coronavirus-related lockdown</a> <a href="https://www.businessinsider.in/policy/economy/finance-minister-nirmala-sitharaman-speech-highlights-and-updates/articleshow/74789836.cms">The big announcements from India's Finance Minister Nirmala Sitharaman</a> <a href="https://www.businessinsider.in/india/news/coranavirus-cases-in-delhi-news-and-updates/articleshow/74773842.cms">The third stage of coronavirus spread in India can be delayed but not stopped, says ICMR</a>

Raghuram Rajan says save people before saving the economy

A prolonged <keyword id="91743" type="PERSON" weightage="20" keywordseo="lockdown">lockdown</keyword> may possiblypush million of Indians into the "margins of subsistence," former <keyword id="466618" type="ORGANIZATION" weightage="20" keywordseo="RBI-Governor-Duvvuri-Subbarao">RBI Governor Duvvuri Subbarao</keyword> said on Sunday while expecting a V curved recovery once the COVID-19 crisis ends and the turnaround in India to be faster than some economies. He was participating in a webinar on "History repeats -but differently- Lessons for the post Corona World," organised by the Manthan Foundation here, in which former Deputy Governor of RBI Usha Thorat took part. "Because most analysts believe that this year India will actually have negative growth or growth will contract. We must remember that even ahead of the crisis two months ago our growth slowed. Now it has completely stopped. Last year growth was five per cent. Just imagine, five per cent growth last year and we are going to negative or zerogrowth this year, a decline of five per cent growth," he said. "It is true that India is going to perform in this crisis better than most other countries. But that is no consolation... Because we are a very poor country and if the crisis persists and if the lockdown is not lifted soon enough, it is quite possible that millions of people will be pushed into the margins of subsistence," he said when asked about his views onthe present situation. Subbarao said that as predicted by analysts, India will have a V shaped recovery which is far better than most of the other countries. "And why do we expect a "V" shaped recovery? Because unlike in a cyclone or in an earthquake, this is not a natural disaster constraint. No capital has been destroyed. Factories are standing. Our shops are still standing. Our people are ready to work as soon as the lockdown is lifted. So it is quite possible the recovery will be V shaped and while we have a V shaped recovery, I think India has a better chance then most of the countries," he opined. According to him, India's recovery was faster than many other countries after the 2008 global financial crisis. On IMF's prediction that India may grow at 1.9 per cent during the current year against about five per cent in the last fiscal, Subbarao said many analysts feel that theprediction is outdated and the growth in GDP may slip intonegative. He said the "life versus livelihood" dilemma for the country is arguably very "short while" for India. Usha Thor at said pumping more liquidity into the system alone cannot work and banks and Non-Banking Finance Companies(NBFC) will need credit guarantee or enhancement to start lending. She also said that states need more support during the crisis and streamlining of non-merit subsidies was required. See also: <a href="https://www.businessinsider.in/india/news/dhfls-kapil-and-dheeraj-wadhawan-taken-into-custody-by-cbi-for-role-in-yes-bank-scam-case/articleshow/75388823.cms">DHFL's Kapil and Dheeraj Wadhawan taken into custody by CBI for role in Yes Bank scam case</a> <a href="https://www.businessinsider.in/india/news/pm-modi-says-indias-fight-against-coronavirus-is-people-driven/articleshow/75387305.cms">PM Modi says India's fight against Coronavirus is 'people-driven'</a> <a href="https://www.businessinsider.in/india/news/lockdown-may-be-extended-in-covid-19-hit-urban-areas-of-maha/articleshow/75386981.cms">Coronavirus lockdown may extend beyond May 3 in urban areas of Maharashtra</a>

Millions of Indians will be pushed to margins of subsistence fit the lockdown doesn't end soon, according to former RBI Governor Subbarao

New Delhi, Apr 17 () Union Minister Nitin Gadkari on Friday said that "bold and forward looking" policy interventions by the RBI shall provide a much-needed boost to the economy. Other Cabinet ministers Piyush Goyal and Smriti Irani too hailed the measures, saying these steps would ensure adequate liquidity, ease financial stress and steer India's emergence as a world leader in the post COVID-19 scenario. The Reserve Bank of India (RBI) cut the reverse repo rate and announced a slew of measures including re-finance window of Rs 50,000 crore and targetted long term repo auction of similar amount to deal with the impact of the Covid-19 pandemic.Besides, it has been decided that the NPA classification norms will exclude the 3-month moratorium window that banks are allowed to give on loan repayments, to ease the worries of micro, small and medium enterprises (MSMEs) that are in danger of becoming bad loan accounts. "I specially thank RBI for their special focus on MSME and providing 50,000 cr for refinancing of MSMEs through SIDBI, NABARD &amp; NHB. The extension of loan classification to 180 days for stressed assists shall address to NPA's issue, " the Minister for MSME and Road Transport and Highways Gadkari tweeted. In another tweet, he said: "State governments are under severe liquidity crunch, increasing of WMA limit by 60 per cent shall help state governments garner more resources". Commerce and Industry Minister Goyal also took to micro blogging site Twitter to express his views on the FBI's announcements. "Given the visionary steps taken under the leadership of PM @narendramodi ji to protect the lives of the people, today's steps by RBI to support the economy will provide liquidity for growth &amp; help India emerge as a world leader in a post COVID-19 world," Goyal tweeted. He said the exclusion of moratorium period from 90 days NPA norm will help borrowers, while simultaneously the health of banks is being maintained through 10 per cent higher provisioning and stopping dividends for the year.Union Minister for Textiles and Women and Child Development Irani tweeted that the "announcements aimed at ensuring adequate liquidity, facilitating bank credit flows &amp; enabling normal functioning of markets, will significantly ease financial stress &amp; eventually strengthen India's growth &amp; progress".The central bank's Governor Shaktikanta Das assured that RBI will use all instruments at its disposal to deal with the challenges posed by the outbreak of the novel coronavirus, depending on evolving situations.This is not the last of the announcements, and based on evolving situations, the central bank will come up with responses in the future in the interest of the economy, he said.In a video message, Das said in order to encourage banks to deploy the surplus funds in investments and loans in productive sectors of the economy, it has been decided to reduce the fixed rate reverse repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 4 per cent to 3.75 per cent with immediate effect.The reverse repo rate is the rate banks earn by parking deposits with the RBI.Surplus liquidity in the banking system has risen significantly in the wake of government spending and the various liquidity enhancing measures undertaken by the RBI, Das noted.He also said that it has been decided to conduct targeted long-term repo operations (TLTRO 2.0) for an aggregate amount of Rs 50,000 crore, to begin with, in tranches of appropriate sizes.Das announced special refinance facilities for a total amount of Rs 50,000 crore to Nabard, Sidbi and National Housing Bank (NHB) to enable them to meet sectoral credit needs.To provide greater comfort to the states for undertaking Covid-19 containment and mitigation efforts, the RBI announced a 30 per cent increase in the ways and means advances limit.It has been decided that in respect of all accounts for which lending institutions decide to grant moratorium or deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period, i.e., there would an asset classification standstill for all such accounts from March 1, 2020 to May 31, 2020.Pointing out that the RBI is monitoring all macro parameters on a continuous basis, he said, economic activity has come to standstill during lockdown.The impact of Covid-19 is not captured in the index of industrial production (IIP) data for February, he said, adding that the contraction in exports in March at 34.6 per cent is much more severe than global financial crisis of 2008-09. RSN MKJ

Gadkari, Goyal hail RBI measures to prop up coronavirus-hit economy

<ul><li><keyword id="6358908" type="DEFINITION" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> has been named as a member of the International Monetary Fund Managing Director's External Advisory Group.</li><li>The external advisory group to provide perspectives from around the globe on key developments and policy issues.</li><li>This will include policy responses to the exceptional challenges the world now faces due to novel <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">coronavirus</keyword> and its economic impact. </li></ul>Former Reserve Bank of India Governor Raghuram Rajan has been named as a member of the International Monetary Fund Managing Director's External Advisory Group. Accordingly, Kristalina Georgieva, Managing Director of <keyword id="6355408" type="DEFINITION" weightage="20" keywordseo="imf">IMF</keyword>, convened the new external advisory group to provide perspectives from around the globe on key developments and policy issues, including policy responses to the exceptional challenges the world now faces due to novel coronavirus and its economic impact. "Even before the spread of Covid-19 and the dramatic health, economic, and financial disruptions it has brought, IMF members confronted a rapidly evolving world and complex policy issues," Georgieva was quoted as saying in a statement. "To serve our membership well in this context, we need top-notch input and expertise from the widest range of sources, inside and outside the Fund," she said. She further said: "Today we had a dynamic discussion to gain their insights, and to receive informal reactions to our ideas and approaches." Other members of the Managing Director's External Advisory Group include Ngozi Okonjo-Iweala, former Finance Minister of Nigeria, Tharman Shanmugar Atnam, Senior Minister of Singapore and Chairman of the Monetary Authority of Singapore, Kristin Forbes, Professor, Massachusetts Institute of Technology and Kevin Rudd, former Prime Minister of Australia amongst others.

Raghuram Rajan joins IMF chief's advisory group - will provide policy responses for coronavirus impact on economy

<ul><li>The Finance Ministry and <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> will hold a meeting on Tuesday to decide on government's borrowing plan for the first half of 2020-21 </li><li>The meeting between the Finance Ministry and Reserve Bank of India (RBI) will be held through video conferencing for the first time as there is lockdown across the country. </li><li>Post meeting, the borrowing calendar for issuance of dated government securities and short term papers will be announced in the evening.</li></ul> The Finance Ministry and RBI will hold a meeting on Tuesday to decide on government's borrowing plan for the first half of 2020-21 amid the lockdown to contain the spread of <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">coronavirus</keyword>.According to sources, the government would resort to front-load its borrowing plan to deal with the challenges posed by COVID-19 on the economy. The meeting between the Finance Ministry and Reserve Bank of India (RBI) will be held through video conferencing for the first time as there is lockdown across the country, the sources said. Post meeting, the borrowing calendar for issuance of dated government securities and short term papers will be announced in the evening. As per the Budget, the government plans to borrow Rs 5.36 lakh crore from the market in 2020-21, higher than the Rs 4.99 lakh crore estimated for the current financial year ending March 2020. The gross borrowing would be Rs 7.8 lakh crore for the next financial year as compared to Rs 7.1 lakh crore estimated for the current financial year. Gross borrowing includes repayments of past loans. Repayment of past loans in the next financial year has been pegged at Rs 2.35 lakh crore. Presenting Budget for 2020-21, Finance Minister Nirmala Sitharaman had said, "Net market borrowings for the year 2019-20 would be Rs 4.99 lakh crore and for the year 2020-21, it would be Rs 5.36 lakh crore". "A good part of the borrowings for the financial year 2020-21 would go towards capital expenditure of the government that has been scaled up by more than 21 per cent. "As I had previously mentioned another about Rs 22,000 crore have been allocated for equity to fund certain specified infrastructure finance companies, who would leverage it manifold and provide much-needed long-term finance to the infrastructure sector. That should spur growth impulses in the economy," she had said. The government raises funds from the market to fund its fiscal deficit through dated securities and treasury bills. The Budget has pegged fiscal deficit at 3.5 per cent for the next fiscal, down from 3.8 per cent of the GDP in the current financial year. The government had earlier estimated the fiscal deficit to be 3.3 per cent of the GDP for the current fiscal but due to revenue shortage, the Centre had to increase it and utilise the 'escape clause' in the Fiscal Responsibility and Budget Management (FRBM) Act. The 'escape clause' allows the government to breach its fiscal deficit target by 0.5 percentage points at times of severe stress in the economy, including periods of structural change and those when growth falls sharply. DP BAL

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