After the Reserve Bank of India on Friday announced a slew of measures to ease the financial crisis the times of Coronavirus lockdown, Prime Minister Narendra Modi said that the steps will greatly enhance the liquidity and improve credit supply.
"These steps would help our small businesses, MSMEs, farmers and the poor. It will also help all states by increasing WMA limits," PM Modi said on Twitter.
RBI Governor Shaktikanta Das has announced new measures to maintain adequate liquidity in system, facilitate bank credit flow and ease financial stress.
The central bank reduced the reverse repo rate - the rate at which banks park their fund with the central bank - by 25 basis points to 3.75 per cent.
This will encourage banks to lend to the productive sectors of the economy.
With regard to other measures, Das said RBI will begin with giving an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) to be undertaken in tranches.
Besides, he announced a re-financing window of Rs 50,000 crore for financial institutions like Nabard, National Housing Bank and Sidbi.
He further said surplus liquidity in the banking system has increased substantially as result of central bank's actions.
"On April 14, International Monetary Fund released its global growth projections revealing that in 2020, the global economy is expected to plunge into the worst recession since 'The Great Depression'," said the RBI Governor.
"For 2020-21, IMF projects sizable reshaped recoveries, close to 9 percentage points for the global GDP. India is expected to post a sharp turnaround and resume its pre-Covid, pre-slowdown trajectory by growing at 7.4 per cent in 2020-21," he added.
The Bank cut the reverse repo rate and announced a slew of measures including a re-finance window of Rs 50,000 crore and targeted long term repo auction of a similar amount to deal with the impact of the COVID-19 pandemic.
(With agency inputs)
