Key announcements made by Reserve Bank of India on March 27, 2020

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Key announcements made by Reserve Bank of India on March 27, 2020

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Here are the key highlights:

In view of COVID-19 pandemic, MPC advanced its meeting and met on March 24, 26 and 27.
MPC voted by 4:2 majority to reduce policy repo rate by 75 bps to 4.4 percent, and reverse repo rate by 90 bps.
Cash reserve ratio cut by 100 basis points to 3 percent
SLR to be reduced by 3 percent
Total measures will result in total liquidity injection of Rs 3.74 lakh crore to system
All banks including scheduled commercial banks, local area banks, small finance banks, regional rural banks, non-banking financial companies, housing finance companies permitted to allow a moratorium of 3 months on payment of installments as of March 1, 2020
In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period.
LTRO money can be invested in commercial paper, which will not be marked-to-market, and will be classified as held-to-maturity
CRR daily maintenance level to be reduced to 80 percent
Rs 1.37 lakh crore to be released into system because of CRR reduction
Incremental capital conservation buffer implementation deferred from March 30, 2020 to Sep 30, 2020
"The decision of MPC was warranted by disruptive force of Coronavirus," says RBI Governor Shaktakanta Das. "We have quarantined 150 of our staff as part of our business continuity plan."
India's H2 GDP growth target of 4.4 percent is at risk. FY21 outlook is highly uncertain
Inflation may weaken because of fall in demand
"Have seen some withdrawals from small private sector banks. Want to reassure everyone that banks are completely safe".