RBI announced relaxation of asset classification norms.

  1. Those accounts that have availed the moratorium facility given by RBI, that period of moratorium will be excluded from the 90-day NPA classification norms of the RBI.
  2. RBI announced moratorium of three months for term loans but a lot of NBFCs were struggling to meet their obligations as the moratorium norms were being interpreted differently by different banks.
  3. To encourage banks to deploy the reserve funds for lending purposes, the RBI reduced reverse repo by 25 bps from 4% to 3.75%. Policy repo rate remains unchanged at 4.4%.
  4. The Liquidity Coverage Ratio has been brought down to 80 per cent from 100 per cent earlier. This will be restored in phases by April 2021.
  5. Banks shall not make any dividend payments till further orders. The RBI also announced measures to boost liquidity of financial institutions like NABARD, SIDBI and NHB. A special refinance facility of Rs 50,000crores to meet sectoral credit requirements has been announced for them. This will include Rs 25,000crore to NABARD for refinancing RRBs, co-operative banks and micro-finance institutions, Rs 15,000crore to SIDBI and Rs 10,000crore to National Housing Bank (NHB) for supporting Housing Finance Companies (HFCs).
  6. The RBI’s announcement comes in the wake of downgrading of economic growth in the current fiscal. The World Bank has forecast India’s economic growth at 1.5%-2.8% in 2020 while the IMF has predicted the growth to slip to 1.5%. Barclays has projected zero growth for 2020.      ASSETCLASSIFICATIONE5F6BD8C6D574086B7D36DC8CF7E13A9
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