Inside RBI’s new plan to fight Covid’s second charge – The Economic Times

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At today’s policy meet, the RBI held the repo rate, its key lending rate, at 4% and kept the reverse repo rate, the borrowing rate, unchanged at 3.35%. The decision comes amid concerns that rising Covid cases could derail the country’s nascent economic recovery.

While keeping the benchmark rates on hold at today’s policy meeting, the Reserve Bank of India also set out various fresh measures to help the economy fight the second charge of the pandemic.

Listed below are some of the new measures aimed at giving the economy a fighting chance in the face of Covid‘s rising ravages:

— The deadline for the TLTRO on-tap liquidity facility was extended to September 30 from March 31 earlier. Longer term reverse repo auctions are expected to help banks manage excess liquidity.

— It was also announced that the secondary government securities market would be extended further.

— The special refinance facility for financial institutions like NABARD, National Housing Bank, Sidbi was also extended with another Rs 50,000 crore for fresh lending during 2021-22.

— Maximum end of day balance for payments banks was increased to Rs 2,00,000 from Rs 1,00,000 earlier. This means payments banks will now be able to accept Rs 2 lakh deposits from individuals, double what they can currently accept.

— It was announced that RTGS and NEFT, currently limited to only banks, will be expanded to a host of other entities. With this, RBI allowed fintech and payments companies to be a part of the two centralised payment systems.

— The central bank proposed to make mandatory the interoperability of full-KYC prepaid payment instruments.

— Another proposal pertained to enhancing outstanding deposits in full KYC PPIs to Rs 2 lakh from the current Rs 1 lakh.

— The ways and means limit for states and UTs was increased 46% to Rs 47,010 crore. This is expected to strengthen states’ hands in their fight against the second virus wave. The interim ways and means advances were raised to Rs 51,560 crore till September.

— Governor Das announced the creation of a Financial inclusion index to measure the level of financial inclusion. This index will be published every July.

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