Prime Minister Narendra Modi on Friday said that the announcements made by Reserve Bank of India (RBI) will “greatly enhance liquidity and improve credit supply” and would “help small businesses, MSMEs, farmers and the poor”. “Today’s announcements by Reserve Bank of India will greatly enhance liquidity and improve credit supply. These steps would help our small businesses, MSMEs, farmers and the poor. It will also help all states by increasing WMA limits,” Prime Minister Narendra Modi tweeted. The RBI earlier today announced a reduction in reverse repo rate by 25 basis points from 4 per cent to 3.75 per cent to facilitate bank credit flows amid the coronavirus crisis and subsequent countrywide lockdown which has brought economic activity to a virtual halt. However, it kept the repo rate unchanged. “The mission is to minimise the epidemiological damage in the country due to coronavirus. I want to convey the RBI’s resolve and the way forward,” said RBI Governor Shaktikanta Das. He also announced conducting of targeted long-term repo operation (TLTRO) with Rs 50,000 crore to maintain liquidity in the system, incentivise bank credit flows and enable normal functioning of the market. Banks will be required to invest 50 per cent of the funds under TLTRO 2.0 to small and mid-sized non-banking finance companies (NBFCs). Das also announced a Rs 50,000 crore special refinance package for National Bank for Agriculture and Rural Development (NABARD Rs 25,000 crore), Small industrial Development Bank of India (SIDBI Rs 15,000 crore) and National Housing Bank (NHB Rs 10,000 crore).
