Chennai: The Reserve Bank of India Governor Shaktikanta Das today said the central bank will ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic.
The central bank reduced the reverse repo rate – the rate at which banks park their fund with the apex 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.
Stating that the RBI is monitoring the situation developing out of Covid-19 outbreak, he noted that the contraction in exports in March at 34.6 per cent was much more severe than global financial crisis of 2008-09.
He said that for 2020-21, International Monetary Fund 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.”
Stating that humanity is facing the trial of its time, as Covid-19 grips the world with its deadly embrace, he said, “In this kind of environment Reserve Bank of India has been very proactive and monitoring the situation closely.”
He said that on 14 April, International Monetary Fund (IMF) released its global growth projections revealing that in 2020, the global economy is expected to plunge into the worst recession since ‘The Great Depression’.
He said since 27 March, the macroeconomic and financial landscape has deteriorated precipitously in some areas.
He added: “But light still shines through bravely in some others.”
Das further said that IMF Economic Counsellor has named it ‘The Great lockdown’ estimating cumulative loss to global GDP over 2020-21 at around 9 trillion US dollars, which is greater than the economies of Japan and Germany combined.
(Inputs from PTI)