The Reserve Bank of India vide Press Release dated 27 March, 2020 has issued Statement on Developmental and Regulatory Policies to ensure adequate liquidity to all constituents so that COVID-19 related liquidity constraints are eased.
Major highlights:
- To reduce the cash reserve ratio (CRR) of all banks by 100 basis points to 3.0 per cent of net demand and time liabilities (NDTL) with effect from the reporting fortnight beginning March 28, 2020.
- To allow banks to borrow overnight at their discretion by dipping up to 2 per cent into the Statutory Liquidity Ratio (SLR), effective immediately.
- To widen the existing Monetary policy rate corridor from 50 bps to 65 bps.
- Banks are permitted to allow a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, 2020.
- All lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all working capital facilities outstanding as on March 1, 2020.
- To permit banks in India which operate International Financial Services Centre (IFSC) Banking Units (IBUs) to participate in the NDF market with effect from June 1, 2020
Click here to read the press release.
