Page 211 - NHB AR 2020-21-3 complete- Print (1)
P. 211
The Reserve Bank of India has undertaken quick innovative responses to the current unprecedented
situation through deep rate cuts, pumping in liquidity, moratorium and other regulatory relaxations.
Box 1.2: Monetary Measures to Combat COVID-19 Pandemic
• Since March 2020, the Reserve Bank of India (RBI) reduced the repo and reverse repo rates
by 115 and 155 basis points (bps) to 4.0 and 3.35 per cent, respectively, and announced
liquidity measures comprising Long Term Repo Operations (LTROs), a Cash Reserve Ratio
(CRR) cut of 100 bps, and an increase in Marginal Standing Facility (MSF) to 3 per cent of
the Statutory Liquidity Ratio (SLR) (now further extended to September 30, 2021) and Open
Market Operations (including simultaneous purchases and sales of government securities),
resulting in cumulative liquidity injections of 5.9 per cent of GDP through September.
• The RBI has provided relief to both borrowers and lenders (through end-August) and the
Securities and Exchange Board of India (SEBI) temporarily relaxed the norms related to
debt default on rated instruments and reduced the required average market capitalization
of public shareholding and minimum period of listing.
• The implementation of the net stable funding ratio and the last stage of the phased-in
implementation of the capital conservation buffers were delayed by six months (the delay
was later extended till October 2021).
• On April 1, 2020, the RBI created a facility to help with State Government’s short-term
liquidity needs, and relaxed export repatriation limits.
• Earlier, the RBI introduced regulatory measures to promote credit flows to the retail sector
and micro, small, and medium enterprises (MSMEs) and provided regulatory forbearance
on asset classification of loans to MSMEs and real estate developers (later extended to loans
from NBFCs).
• CRR maintenance for all additional retail loans has been exempted, and the priority sector
classification for bank loans to NBFCs has been extended for on-lending for FY20/21.
• During April 17-20, 2020, the RBI, along with additional monetary easing, announced:
• A TLTRO-2.0 (funds to be invested in investment grade bonds, commercial paper, and
non-convertible debentures of NBFCs).
• Special refinance facilities for Rural Banks, Housing Finance Companies, and small and
medium-sized enterprises.
Annual Report 2020-21 | 191
situation through deep rate cuts, pumping in liquidity, moratorium and other regulatory relaxations.
Box 1.2: Monetary Measures to Combat COVID-19 Pandemic
• Since March 2020, the Reserve Bank of India (RBI) reduced the repo and reverse repo rates
by 115 and 155 basis points (bps) to 4.0 and 3.35 per cent, respectively, and announced
liquidity measures comprising Long Term Repo Operations (LTROs), a Cash Reserve Ratio
(CRR) cut of 100 bps, and an increase in Marginal Standing Facility (MSF) to 3 per cent of
the Statutory Liquidity Ratio (SLR) (now further extended to September 30, 2021) and Open
Market Operations (including simultaneous purchases and sales of government securities),
resulting in cumulative liquidity injections of 5.9 per cent of GDP through September.
• The RBI has provided relief to both borrowers and lenders (through end-August) and the
Securities and Exchange Board of India (SEBI) temporarily relaxed the norms related to
debt default on rated instruments and reduced the required average market capitalization
of public shareholding and minimum period of listing.
• The implementation of the net stable funding ratio and the last stage of the phased-in
implementation of the capital conservation buffers were delayed by six months (the delay
was later extended till October 2021).
• On April 1, 2020, the RBI created a facility to help with State Government’s short-term
liquidity needs, and relaxed export repatriation limits.
• Earlier, the RBI introduced regulatory measures to promote credit flows to the retail sector
and micro, small, and medium enterprises (MSMEs) and provided regulatory forbearance
on asset classification of loans to MSMEs and real estate developers (later extended to loans
from NBFCs).
• CRR maintenance for all additional retail loans has been exempted, and the priority sector
classification for bank loans to NBFCs has been extended for on-lending for FY20/21.
• During April 17-20, 2020, the RBI, along with additional monetary easing, announced:
• A TLTRO-2.0 (funds to be invested in investment grade bonds, commercial paper, and
non-convertible debentures of NBFCs).
• Special refinance facilities for Rural Banks, Housing Finance Companies, and small and
medium-sized enterprises.
Annual Report 2020-21 | 191
