No payment of EMI till Aug 31, GDP to remain negative for FY21: RBI Governor


Daijiworld Media Network - Mumbai (SHP)

Mumbai, May 22: RBI Governor Shaktikanta Das addressed a press conference on Friday at 10 am. He announced a series of measures to ease liquidity pressure in the banking system and cushion the blow of COVID-19. It was for the third time in three months that the RBI Governor was announcing coronavirus-related relief measures in the media.

RBI governor Shaktikanta Das began stating that an off-cycle meeting of the monetary policy committee was undertaken. This was done for the past three days. He further announced a repo cut by 40 bps to 4 per cent.

Das also asserted that the volume of world trade would shrink by 13-32 per cent in 2020. He pointed out that with the fall in rural and urban demand since March 2020, fiscal revenues have suffered majorly.

 

However, he maintained that the biggest hit caused by the pandemic was the private consumption slump leading to a drop in the consumer durables production by 33 per cent in March 2020.

The RBI governor termed the agriculture and the allied sector as a ray of hope for India.
Addressing the area of food inflation, RBI Governor Shaktikanta Das said that food inflation which had eased from January 2020 peak in February and March, had surged to 8.6 per cent in April. He stressed that the price of vegetables, oilseeds, and milk emerged as pressure points.

The Monetary Policy Committee (MPC) is of the view that headline inflation in the first half of 2020 will stay intact but by Q3 and Q4 it may fall below the target of 4 per cent, said the RBI governor. However, Das stated that there would be a gradual revival in the activity and demand by the second half of FY21. Nevertheless, he added that the GDP will remain in negative this year.

Monetary policy transmission has improved, says RBI governor Shaktikanta Das. He asserted that there was visible progress in passing on a lower rate to borrowers across various business segments.

In order to provide greater flexibility of SIDBI, another 90 days extension for the 90-day term loan facilities will be offered. It would also provide additional liquidity support to the MSME sector, the RBI governor said.

RBI governor Shaktikanta Das says a facility of Rs 15,000 crore line of credit for 90 days for US dollar swap facility will be provided to EXIM Bank. This will have a rollover facility to up to one year.

In another major announcement by Das, the term loan moratorium has been extended till August 31. This makes it a six-month moratorium. He added that the lending institutions are being permitted to restore the margins for working capital to the origin level by March 31, 2021.

Further, the RBI governor declared that the apex financial body was prepared to use all its instruments to address the dynamics of an unknown future. He maintained that although the trials are traumatic, together everyone would triumph.

Among other regulatory measures, RBI has hiked the group exposure limit for banks to 30 per cent from 25 per cent. The central bank set the 25 per cent limit in June 2019 and capped lenders' exposure to a single party at 20 per cent. Considering the current situation due to COVID-19 outbreak, this change has been made said, Shaktikanta Das.

RBI governor Shaktikanta Das said that the Reserve Bank remained in pro-active liquidity management mode, expanding its array of measures, both conventional and unconventional, to augment system-level liquidity as to inject liquidity to the sectors facing funding constraints.

Meanwhile, Das asserted that the MPC realised the macroeconomic impact of the pandemic is turning out to be more severe than initially anticipated, resulting in various sectors of the economy plunging in distress. He added that the impact of the shock has been compounded by the interaction of supply disruptions and demand compression.

He also asserted that the soft global prices of metals and other industrial raw materials are likely to keep input costs low for domestic firms. He added that deficient demand may hold down pressures on core inflation (excluding food and fuel), although persisting supply dislocations impart uncertainty to the near term outlook.

RBI governor Shaktikanta Das said that upside impulses could be unleashed in India if the coronavirus pandemic is contained, and if the social distancing measures are phased out faster.

Though credit growth remains muted, RBI governor Shaktikanta Das said that scheduled commercial banks’ investments in commercial paper, bonds, debentures and shares of corporate bodies in this year so far (up to May 8) increased sharply by Rs 66,757 crore as against a decline of Rs 8,822 crore during the same period last year. He also added that there were net inflows into various schemes of mutual funds in April in contrast to large outflows in March.

Overall in India, RBI governor Shaktikanta Das said that electricity consumption has plunged, while both investment activity and private consumption suffered precipitous declines. He stated that it also mirrored a decline in capital goods production and the large retrenchment in the output of consumer durables and non-durables in March 2020.

For credit-related to exports, RBI governor Shaktikanta Das said that it has been decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020.

In India, RBI said in its monetary policy statement that the only silver lining was provided by agriculture, with the summer sowing of rice, pulses and oilseeds in the country progressing well, with total area sown under the current kharif season up by 43.5 per cent so far. Further, RBI said that the rabi harvest is promising to be a bumper as reflected in record procurement.

 

  

Comment on this article

  • steven, DXB

    Fri, May 22 2020

    I have bank loan and the bank has given me moratorium for 3 months without explaining the interest rate . Is it not open loot by the RBI and bank if interest is applied on the postponed EMIs?

    DisAgree Agree [5] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Fri, May 22 2020

    HDFC is conveniently debiting my EMI ...

    DisAgree [1] Agree [7] Reply Report Abuse

  • Ahmed K. C., Mangalore

    Fri, May 22 2020

    No EMIs but, Interest will continue on a little higher scale.

    DisAgree Agree [8] Reply Report Abuse

  • J N Lobo, Mumbai

    Fri, May 22 2020

    But interest on deposits reduced to 4.0%. What a loot !

    DisAgree Agree [6] Reply Report Abuse

  • suhail, Mangalore

    Fri, May 22 2020

    First Government cutdown electricity and water price by 50% then talk about loans.... loan if we don't pay they will take the car legally coz we have signed 1000 signs in 100 pages without reading any one line.
    Government is looting in everywhere in daily needs and fooling people don't pay EMI.

    DisAgree [1] Agree [10] Reply Report Abuse

  • MIA, MIA

    Fri, May 22 2020

    This kind of statment to confuse indian citizen, It say no EMI to be paid. Actually they should say dont require to pay EMI now but after 3 month you have to pay it.

    DisAgree Agree [15] Reply Report Abuse

  • El En Tea, Mangalore

    Fri, May 22 2020

    2014 baad Bharat ka haal bahut kharab hei
    Shani graha panvati.....

    DisAgree [8] Agree [17] Reply Report Abuse

  • William, Mangalore

    Fri, May 22 2020

    Anything spoken by the RBI Governor is just nothing because masters degree holder in history doesn't deserve the position.

    This position is just filled for convenience sake.

    DisAgree [2] Agree [24] Reply Report Abuse

  • Johnny, MangaloreM

    Fri, May 22 2020

    Please don't be surprised when official govt data comes out with positive GDP.

    DisAgree [1] Agree [18] Reply Report Abuse

  • smr, Karkala

    Fri, May 22 2020

    The RBI Governor with Masers in History qualifications has already signed for the negative trend of the GDP much before the 'COVID-19' economic impact.
    Since he has been appoIn 2017-18, Rs 40,659 crore was transferred in dividend to the government.

    For the year 2019 RBI has transfer Rs 1.76 lakh crore from surplus reserve to government.During the year (2016-17) of demonetization, the RBI had transferred Rs 30,659 crore, less than half of the Rs 65,876 crore it had paid in 2015-16.

    Since PM Modi BJP government in center came to power banks wrote off Rs 6,60,000 crore worth bad loans.To date RBI has no clue what was the success rate of the 'Demonetization' and so far reject all the PIL with weird reasons.

    Over 3,400 branches of 26 PSBs closed or merged in last 5 years. The BJP government with History Governor appointed will be remembered for India's banking system in the future in history text books.

    Jai Hind

    DisAgree [7] Agree [29] Reply Report Abuse

  • Roshan Pereira, Mangaluru

    Fri, May 22 2020

    GDP will be negative until the next election. God bless our country

    DisAgree [3] Agree [30] Reply Report Abuse

  • Monty Dotor, Mangalore

    Fri, May 22 2020

    Rate cut is good news for borrowers,bad news for depositors. Inflation will rise which is bad news for everybody.

    DisAgree [1] Agree [18] Reply Report Abuse

  • Lawrence Lobo, Mangalore

    Fri, May 22 2020

    Governor no EMI till August. Please visit all the banks

    DisAgree [1] Agree [20] Reply Report Abuse

  • rakesh, bangalore

    Fri, May 22 2020

    no one believes him he is a neither economist nor qualified person to b RBI Governor. he is just History Graduate.

    DisAgree [1] Agree [29] Reply Report Abuse

  • Valerian Dsouza, Udupi / Mumbai

    Fri, May 22 2020

    Govt should seize this opportunity to invite investment and promotion to sectors making Masks, PPE, Ventilators, sanitizers, medicines etc. which are ray of hope for India during Covid_19 crisis all over the world.
    Software and hardware essential for virtual meetings also would be in great demand and we have skilled man power.
    We have several green zones and lot of job less people and Banks have idle funds.
    Best way to attract investment is to COLLECT ONLY GST AND GIVE INCOME TAX EXEMPTION.
    Surely we will benefit.

    DisAgree [4] Agree [5] Reply Report Abuse

  • J N Lobo, Mumbai

    Fri, May 22 2020

    Please specify, if you can, which are the banks having idle funds.

    DisAgree [2] Agree [4] Reply Report Abuse

  • Valerian Dsouza, Udupi / Mumbai

    Fri, May 22 2020

    Almost every bank that's phoning random customers, almost every day to inquire if they have financial needs, are having funds for lending to a viable business.
    There is no dearth of funds with banks for viable projects!

    DisAgree Agree [2] Reply Report Abuse

  • R.Bhandarkar, Mangaluru '

    Fri, May 22 2020

    Honestly all these figures, announcemets don't change life much for the common man!
    Unless the man on the street is taken care of what's the use?
    Stock market, Economy, China aggression, Pak Terror plans, Covid 19, Amphan Cyclone now... phew !!
    It may take us some time or more time to recover.
    United we must stand and survive.

    DisAgree [12] Agree [17] Reply Report Abuse

  • francis lobo, Mangalore

    Fri, May 22 2020

    You missed Nepal and Sri Lanka also !.

    DisAgree [1] Agree [12] Reply Report Abuse

  • R.Bhandarkar, Mangaluru '

    Fri, May 22 2020

    Here and there I have left somebody... some issues.
    To make list short.
    Please don't mind.

    DisAgree [14] Agree [1] Reply Report Abuse

  • Sahil, Mangaluru

    Fri, May 22 2020

    Problems to be continued but reality we tax payers need to be experienced heavily as usual.

    DisAgree [1] Agree [20] Reply Report Abuse

  • SJM, Mangalore

    Fri, May 22 2020

    Good news Sir. Sorry to say GDP started declining from your era prior to Covid 19 pandemic .

    DisAgree [8] Agree [41] Reply Report Abuse


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