Union Finance Minister announces Stimulus to boost Demand in the Economy: Highlights:“Total demand boost due to today’s measures expected to be more than ₹ 1 lakh crore”.Finance Minister Nirmala Sitharaman also announced additional capital spending and Rs 12,000 crore, 50-year interest-free loan to states to boost the economy that has been battered by the pandemic and the resulting lockdown.
The Reserve Bank of India Governor Shaktikanta Das announced the policy decision of the Monetary policy committee on 9th October 2020. RBI’s MPC began its three-day deliberations on Wednesday. This was the first meeting of the new MPC which was formed after the appointment of three three eminent economists – Jayant Verma, Ashima Goyal and Shashanka Bhide. The meeting of the six-member MPC, earlier slated for September 29 to October 1, was rescheduled as the appointment of independent members was delayed. The MPC must have a quorum of four.
Reserve Bank of India has comprehensively reviewed the Priority Sector Lending (PSL) Guidelines to align it with emerging national priorities and bring sharper focus on inclusive development, after having wide ranging discussions with all stakeholders.
Revised PSL guidelines will enable better credit penetration to credit deficient areas; increase the lending to small and marginal farmers and weaker sections; boost credit to renewable energy, and health infrastructure.
The Reserve Bank of India set new conditions for banks to open current accounts for large borrowers in order to strengthen credit discipline. Use of multiple operating accounts by borrowers—both current well as cash/overdraft accounts—has been observed to be prone to vitiating credit discipline, the RBI said its Statement on Developmental and Regulatory Policies on Thursday. “The checks and balances put in place in the extant framework, for opening of current accounts, are found to be inadequate,” it said, adding that the central bank has revised its guidelines to bring in appropriate safeguards. The revised norms are also expected to bring in the requisite discipline in collective actions by creditors for speedier resolution of stress in the accounts of borrowers.
Statement on Developmental and Regulatory Policies sets out various developmental and regulatory policy measures to enhance liquidity support for financial markets and other stakeholders; further easing of financial stress caused by COVID-19 disruptions while strengthening credit discipline; improve the flow of credit; deepen digital payments; augment customer safety in cheque payments; and facilitate innovation across the financial sector by leveraging on technology through an Innovation Hub.
The Monetary Policy Committee met on 4th, 5th and 6th August for its second meeting of 2020-21, completing four years of its operation under the new monetary policy framework. At the end of its deliberations, the MPC voted unanimously to leave the policy repo rate unchanged at 4 per cent and continue with the accommodative stance of monetary policy as long as necessary to revive growth, mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward. The Marginal Standing Facility (MSF) rate and the Bank rate remain unchanged at 4.25 per cent. The reverse repo rate stands unchanged at 3.35 per cent.
Reserve Bank released the 21st Issue of the Financial Stability Report (FSR) on 24th July 2020, which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, and the resilience of the financial system in the context of contemporaneous issues relating to development and regulation of the financial sector.
RBI has issued instructions to All Asset Reconstruction Companies in exercise of the powers conferred by Section 9 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, Asset Reconstruction Companies registered with the Bank to adopt ‘Fair Practices Code’ so as to ensure transparency and fairness in their operation.
RBI issued instructions to all the Financial Institutions including Banks, Cooperative Banks, NBFC’s and other FI’s to initiate necessary action for reclassification of enterprises as per the new definition w.e.f July 1, 2020 and issue necessary instructions to your branches/controlling offices in this regard,
The Government of India has approved a scheme to improve the liquidity position of NBFCs/HFCs through a Special Purpose Vehicle (SPV) to avoid any potential systemic risks to the financial sector.