Rediff.com  » Business » RBI announces fresh measures to arrest economic downtrend

RBI announces fresh measures to arrest economic downtrend

Source: ANI
Last updated on: October 09, 2020 14:33 IST
Get Rediff News in your Inbox:

The Reserve Bank of India (RBI) on Friday said it will maintain comfortable liquidity conditions and conduct market operations in the form of outright and special open market operations.

 

It will conduct on tap targeted long-term repo operations (TLTRO) with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate.

"The scheme will be available up to March 31 next year with flexibility with regard to enhancement of the amount and period after a review of the response to the scheme," said RBI Governor Shaktikanta Das.

 

He said liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial papers, and nonconvertible debentures issued by entities in specific sectors over and above the outstanding level of their investments in such instruments as on September 30.

The liquidity availed under the scheme can also be used to extend bank loans to these sectors. Moreover, banks that had availed of funds earlier under TLTRO and TLTRO 2.0 will be given the option of reversing these transactions before maturity.

Besides, the RBI will conduct special and outright bond purchases.

The size of these special, outright open market operations (OMOs) will be increased to Rs 20,000 crore.

OMOs will be conducted impart liquidity to state development loans (SDLs) and thereby facilitate efficient pricing as a special case during the current financial year.

Das said this will improve secondary market activity and rationalise the spreads of SDLs over central government securities of comparable maturities.

"This measure, along with the extension of Held to Maturity (HTM) till March 2022 should ease concerns about illiquidity and absorptive capacity for the total government borrowing in the current year."

In addition, the central bank will rationalise risk weights for all new housing loans by March 31, 2022.

The RBI will also extend the scheme for co-lending to all non-banking finance companies and housing finance companies.

The RBI also decided to provide round-the-clock availability of Real Time Gross Settlement (RTGS) from December.

"India will be among very few countries globally with a 24 x 7 x 365 large-value real-time payment system. This will facilitate innovations in the large value payments ecosystem and promote ease of doing business," he said.

Photograph: PTI Photo

Get Rediff News in your Inbox:
Source: ANI
SHARE THIS STORY 

Moneywiz Live!