United News of India
Mumbai, May 22: The Reserve Bank of India (RBI) on Friday extended moratorium on loans by another three months owing to financial stress caused by the extended lockdown.
With this announcement, the moratorium which would have ended on May 31 will remain in effect till August 31, 2020.
In a statement, RBI Governor Shaktikanta Das said, “Three-month moratorium we allowed on term loans & working capitals we allowed certain relaxations. In view of the extension of the lockdown & continuing disruption on account of #COVID19, these measures are being further extended by another three months from June 1 to August 31.”
Measures announced can be divided into four categories: to improve the functioning of markets, to support exports & imports, to ease financial stress by giving relief on debt servicing & better access to working capital & to ease financial constraints faced by state governments,” he added.
The Group Exposure Limit of banks is being increased from 25 per cent to 30 per cent of eligible capital base for enabling the corporates to meet their funding requirements from banks. The increased limit will be applicable up to 30th June 2021, he said.
“It has been decided to relax rules governing withdrawal from Consolidated Sinking Fund (CSF) while at the same time, ensuring depletion of the fund balance is done prudently. It will enable states to meet about 45 per cent of redemption of their market borrowings which are due in 2020-21,” he added.
He said that GDP growth in 2020-21 is expected to remain in the negative category with some pick up in the second half.
India’s foreign exchange reserves have increased by 9.2 billion during 2020-21 from 1st April onwards. So far, up to 15th May, foreign exchange reserves stand at 487 billion US dollars, Das said.
However, amidst the uncertainty surrounding the pandemic, agriculture provided a beacon of hope with an increase of 3.7 per cent in food grain production, the RBI Governor said.
He further reported that Industrial production shrank by close to 17 per cent in March with manufacturing activity down by 21 per cent. Output of core industries contracted by 6.5 per cent.
“The repo rate cut by 40 basis points from 4.4 per cent to 4 per cent. Reverse repo rate stands reduced to 3.35 per cent,” Das said.