A week after Finance Minister Nirmala Sitharaman, in her second Budget speech, announced major tax reliefs for the salaried class and measures to boost demand and liquidity crunch, the Reserve Bank of India on Thursday announces some more steps to revive ailing economy. A decline in GDP, subdued demand, liquidity crisis and rising inflation have remained major problems for the Indian economy.
RBI, in its sixth bi-monthly policy resolution, announced various developmental and regulatory policy measures for improving credit flows to certain sectors; reinforcing monetary transmission for MSMEs; strengthening regulation and supervision; broadening and deepening financial markets; and improving payment and settlement systems.
To start long term repo operations worth Rs 1 lakh crore to improve liquidity
In a bid to ensure sufficient liquidity in the system, the apex bank has decided to conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of Rs 1 lakh crore at the policy repo rate. This will start from the fortnight beginning on February 15, 2020. The move will encourage banks to undertake maturity transformation smoothly and seamlessly so as to augment credit flows to productive sectors.
Extends one-time restructuring of loans to MSMEs
The central bank has decided to extend the benefit of one-time restructuring of loans to MSMEs that were in default as on January 1, 2020 without an asset classification downgrade. Such MSMEs can avail the benefit by December 31, 2020. The move will benefit MSME entities which could not be restructured earlier.
To extend date of commencement of project loans for commercial real estate
The apex bank has decided to permit extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by another one year without downgrading the asset classification.
Allows regional rural banks to act as merchant acquiring banks
To give a fillip to digital banking and enabling regional rural banks (RRBs) to provide cost effective and user-friendly solutions to their customers, the RBI has decided to allow RRBs, like other commercial banks, to act as merchant acquiring banks, using Aadhaar Pay - BHIM app and POS terminals.
To invite public comment on regulations of housing finance companies
The RBI has proposed to place the draft revised regulations on housing finance companies (HFCs) on the bank's website by the end of this month for public comments. In August last year, the central bank had issued a notification stating that the central bank would carry out a review of the extant regulatory framework applicable to HFCs and issue revised regulations in due course. Currently, HFCs comply with the directions and instructions issued by National Housing Bank (NHB).
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By Chitranjan Kumar