RBI’s ACTIONS
By INSOL INDIA EDITORIAL Posted On : April 21, 2020
RBI has for the second time in COVID-19 crisis has stepped in on 16.4.2020, Friday, to ensure liquidity and elevate stress in state finances, NBFCs, micro-finance institutions, real estate – both commercial and housing. RBI has offered fifty thousand crore to be invested in investment grade bonds, commercial papers and non-convertible debentures of NBFCs with a caveat that fifty per cent of the amount so availed by each one of them shall be invested and given to small and mid-size NBFCs and micro-finance.
In another announcement the RBI has advised that there would be asset classifications standstill for all NPA accounts (overdue 90 days) and the time from 31.3.2020 to 31.5.2020 shall be excluded.
RBI has also directed all banks including co-operative banks not to make any further payments of dividends from their respective profits for the year ending 31.3.2020 until further orders.
The Reserve Bank of India on Friday announced a sixty per cent increase in the ways and means advances (WMA) limit of state governments over and above the levels as on 31.3.2020, with a view to enable the states to undertake COVID-19 containment and mitigation efforts and to better plan their market borrowings. In other words, the facility which is subject to repayable for not more than three months from the date of making the advances is a facility for both Centre and States to borrow from the Reserve Bank of India. These borrowings are meant purely to help them tide over the temporary mismatches in the cash flows of their receipts and expenditure. In that sense these are not the source of finance per se. It is a lending in terms of Section 17 (5) of the Reserve Bank of India Act, 1934.
In another announcement the RBI has advised that there would be asset classifications standstill for all NPA accounts (overdue 90 days) and the time from 31.3.2020 to 31.5.2020 shall be excluded.
RBI has also directed all banks including co-operative banks not to make any further payments of dividends from their respective profits for the year ending 31.3.2020 until further orders.
The Reserve Bank of India on Friday announced a sixty per cent increase in the ways and means advances (WMA) limit of state governments over and above the levels as on 31.3.2020, with a view to enable the states to undertake COVID-19 containment and mitigation efforts and to better plan their market borrowings. In other words, the facility which is subject to repayable for not more than three months from the date of making the advances is a facility for both Centre and States to borrow from the Reserve Bank of India. These borrowings are meant purely to help them tide over the temporary mismatches in the cash flows of their receipts and expenditure. In that sense these are not the source of finance per se. It is a lending in terms of Section 17 (5) of the Reserve Bank of India Act, 1934.