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.
The Reserve Bank of India ( RBI) has announced a host of measures aimed at boosting liquidity in the banking system in the backdrop of prevailing economic uncertainty due to coronavirus (COVID-19) outbreak. The specific measures announced by Governor Shaktikanta Das are expected to infuse an additional ₹3,74,000 crore into the banking system as they take effect.
As part of the measures, Reserve Bank said it will conduct auctions of targeted term repos of up to three years tenor, for a total of up to ₹1 trillion, at a floating rate linked to the repo rate. Liquidity availed under the scheme by banks will be deployed in investment grade corporate bonds, commercial paper, and non-convertible debentures over and above the outstanding level of their investments in these bonds as on March 27, 2020.
As a one-time measure to help banks tide over the disruption caused by COVID-19, RBI announced reduced cash reserve ratio (CRR) for all banks by 100 basis points to 3.0% of net demand and time liabilities (NDTL) with effect from the reporting fortnight beginning March 28, 2020.