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India set to post a sharp turnaround in FY-22 with 7.4% growth - RBI Governor
The RBI Governor, Shaktikanta Das, in his second press briefing since the COVID-19 outbreak rolls out arrays of measures to counter the economic slowdown. The governor said that the financial situation has deteriorated in a few sectors. Small and mid-size companies have taken a hit due to COVID-19 pandemic and complete lockdown.
"The Great Lockdown", as coined by IMF economic counsellor, and resulted in at over 9 Trillion cumulative global loss, and RBI is monitoring the situation closely.
In his address, Shaktikanta Das announced new measures to boost the economy. He was upbeat over the IMF prediction that India will post a sharp economic turnaround in the next financial year with a 7.4% growth rate. He said that hope is not lost yet.
Key Takeaways from RBI Governor's media address
RBI has asked the banks not to declare any dividends until further notice. This step will help banks to retain capital.
Reverse repo rate is cut by 25 bps from 4% to 3.75% with immediate effect. However, the Repo rate will remain the same.
Furthermore, the 90-day NPA norm will not apply on moratorium granted on existing loans by banks.
Small and medium-sized industries get a 50,000 Crore booster package from RBI. Out of this 50K finance facility, NABARD will get Rs 25,000 crore, SIDBI Rs 15,000 crore, and NHB Rs 10,000 crore.
These financial institutions lend to rural banks, housing finance companies, and small businesses. Certainly, the RBI boost will help them to raise money quickly at this pandemic time when the markets are not able to generate that kind of resource. The refinance will be available at a low rate of 4.4%, which allows them to on-lend the money at a low ROI.
The governor said that there is nothing to worry about India's foreign exchange reserves as it continues to remain robust.
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