NEW DELHI, May 22, 2020, DNA India. Reserve Bank of India (RBI) governor Shaktikanta Das announced on Friday extension of loan moratorium by three more months to August 31 due to the financial stress caused by the COVID-19 pandemic, DNA India reported.
He made the statement at a press conference amidst expectations that he will announce measures to ease the financial burden caused by the pandemic.
“Three-month moratorium we allowed on term loans&working capitals we allowed certain relaxations. In view of the extension of the lockdown&continuing disruption on account of #COVID19, these measures are being further extended by another 3 months from June 1 to Aug 31,” RBI governor said.
“Measures announced today can be divided into 4 categories: to improve the functioning of markets,to support exports&imports, to ease financial stress by giving relief on debt servicing&better access to working capital&to ease financial constraints faced by state govts,” he added.
The Group Exposure Limit of banks is being increased from 25% to 30% of eligible capital base for enabling the corporates to meet their funding requirements from banks. The increased limit will be applicable up to 30th June 2021, Shaktikanta said.
“It has been decided to relax rules governing withdrawal from Consolidated Sinking Fund (CSF) while at the same time, ensuring depletion of the fund balance is done prudently. It will enable states to meet about 45% of redemption of their market borrowings which are due in 2020-21,” he added.
He said that GDP growth in 2020-21 is expected to remain in the negative category with some pick up in the second half.
India’s foreign exchange reserves have increased by 9.2 billion during 2020-21 from 1st April onwards. So far, up to 15th May, foreign exchange reserves stand at 487 billion US dollars, Das said.
However, amidst the uncertainty surrounding the pandemic, agriculture provided a beacon of hope with an increase of 3.7% in food grain production, RBI governor said.
He further reported that Industrial production shrank by close to 17% in March with manufacturing activity down by 21%. Output of core industries contracted by 6.5%.
“The repo rate cut by 40 basis points from 4.4 % to 4%. Reverse repo rate stands reduced to 3.35%,” Shaktikanta said.