RBI Provides Lending Capacity Worth Rs 1 Lakh Crore With Special Focus on Small and Medium Businesses

RBI Governor Shaktikanta Das said the central bank will conduct targeted repo operations for an amount of Rs 50,000 crore, to begin with, in tranches of appropriate sizes.

New Delhi: Reserve Bank of India Governor Shaktikanta Das announced a series of steps on Friday to help provide liquidity to lending institutions by cutting its reverse repo rate by 25 basis points to 3.75 percent, launching targeted long-term repo operations (TLTRO) for an amount of ₹50,000 crore to help non-banking financial companies and allocating refinance facility for institutions such as NABARD, SIDBI and NHB.

Das said the central bank will conduct targeted repo operations for an amount of Rs 50,000 crore, to begin with, in tranches of appropriate sizes. He further added that funds will have to be made in bonds, CP, NCD of NBFCs with 50 per cent of it going to small and mid-sized NBFC within one month of availing the credit from RBI.

NBFCs and MFIs have been suffering on account of tight cash conditions.

“The TLTROs will be launched in tranches of appropriate sizes,” Das said while announcing a series of steps to help revive the Indian economy in view of the ongoing coronavirus crisis. “Based on assessment, the RBI will increase the size of the TLTRO,” he added.

TLTRO auction of Rs 25,000 crore will be conducted on Friday, according to RBI governor. Das further said RBI will ensure adequate liquidity in the system to ease the financial stress caused by the COVID-19 pandemic.

Rs 50,000 crore special finance facility will also be provided to financial institutions such as Nabard, Sidbi (Small Industries Development Bank of India) and NHB (National Housing Bank). This is being done keeping in mind small and medium business that generally loan from such institutions.

Besides the steps taken on Friday, the RBI had announced liquidity measures to the tune of Rs 2.7 lakh crore on March 27.

Das on Friday also lowered banks’ liquidity coverage requirement from 100 percent to 80 percent with immediate effect for all scheduled commercial banks.

At the start of the conference, the governor said “humanity faces the trial of its time” even as he said the Indian economy could do better than others, citing the IMF’s growth forecasts. Still, Das added that the RBI stood ready to act, and said the central bank would act again if needed.

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