The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the central bank would ensure sufficient liquidity in the economy. It aims to ease the financial stress caused by the Covid-19 pandemic.
The central bank reduced the reverse repo rate. The rate at which banks deposit their fund with the central bank by 25 basis points to 3.75 per cent. It will allow banks to lend to the productive sectors of the economy.
With regard to other steps, Das said RBI would begin with giving an additional Rs 50,000 crore via targeted long-term repo operation (TLTRO). The tranches will undertake in its operation.
Besides, he declared a re-financing fund of Rs 50,000 crore for financial institutions including Nabard, National Housing Bank and Sidbi.
A new information showed that the surplus liquidity in the banking system has increased significantly as result of central bank’s actions.
The RBI is tracking the situation developing out of Covid-19 outbreak. He noted that the contraction in exports in March at 34.6 per cent was even more serious. To emphasize this point, it is very crucial case rather than global financial crisis of 2008-09.
Union Minister Piyush Goyal tweeted, “The announcement by RBI Governor to do” whatever it takes “is a huge boost to the economy’s confidence. RBI is actively tracking the economy to help growth. The IMF has also projected India as one of the fastest growing countries in the current financial year.”
The ambitious measures are given under PM Narendra Modi to protect people’s live. Also, RBI takes an action to support the economy. In addition, it should provide growth liquidity and help India as a global leader amid the COVID-19.