Alone Advanced MPC meeting highlights: 1. Repo rate reduced by 0.75 basis points from 5.15 to 4.40. 2. Reverse Repo rate reduced by 0.90 basis points from 4.90 to 4.00. 3. To mitigate the adverse effect on the Economic activity leading to pressures on cash flows across the sectors, the RBI will conduct auction of Targetted Long Term Repo Operations (TLTRO) of upto 3 years tenure of appropriate sizes for a total amt of up to Rs.1 Lakh Crore at a floating rate linked to Policy Repo Rate. 4. CRR of all Banks reduced by 100 basis points to 3% of Net Demand & Time Liabilities (NDTL) w.e.f; the reporting fortnight beginning March, 28 for a period of 1 year. This reduction in CRR wd release primary Liquidity of abt Rs.1 Lakh, 37 Thousand crores uniformly across the Banks. 5. Requirement of min. CRR Daily maintenance balance reduced from 90% to 80% from the 1st day of reporting fortnight beginning March, 28. This is one time dispensation available upto June, 2020. 6. MSF increased from 2% of SLR to 3% with immediate effect . This facility will be available upto June 30, 2020. This facility shall benefit the Banking system by allowing an additional liquidity of Rs. 1.37 Lakh Crore . These three Liquidity measures i.e., TLTRO, CRR & MSF shall inject a total Liquidity of Rs. 3.74 Lakh Crore into the system. 7. Monetary Policy Corridor widened from the existing 40 basis points to 65 basis points. Under the new corridor, the Reverse Repo Rate under the Liquidity Adjustment Facility (LAF) wd be 40 basis points lower than the Policy Repo Rate as against the existing 25 basis points. The MSF rate wd of course continue to remain 25 BPs above the Policy rate. 8. No prediction on ECONOMIC OUTLOOK, due to very highly volatile situation. 9. All Banks/Lending Institutions being allowed to consider moratorium on EMIs/payment of all Term loans outstanding as on 1st March, 2020 for 3 months. 10. Lending Institutions are being allowed a deferrment of 3 months on payment of interest on Working Capital sanctioned in the form of Cash Credit facilities/Overdraft outstanding as on 1st March, 2020. The accumulated interest on such facilities shall be paid after the expiry of this period. 11. Net Stable Funding Ratio (NSFR) which reduces funding risk by requiring the Banks to fund their activities with sufficiently stable sources of funding over a time horizon of 1 year in order to mitigate the future funding risk, required to be implemented by the Banks in India by 1st April, 2020 is hereby deferred by 6 months, to be implemented by 1st of October, 2020. 12. Deferrment of last tranche of Capital Conservation Buffer (CCB): CCB which is designed to ensure that Banks build up Capital Buffers during normal time that is outside periods of stress which can be drawn down as losses are incurred during a period of stress. Considering the potential stress on account of COVID-19, it has been decided to deferr the last tranche of 0.625% of CCB from March 31st, 2020 to Sept.30, 2020. 13. Permitting Indian Banks to deal in Non Deliverable Forward (NDF) Markets: The NDF Market has been growing rapidly but at present Indian Banks are not allowed to participate in it although the benefits of participating in NDF markets have been widely recognised. The time is opposite to improve efficiency of price discovery. Accordingly, Banks in India which operate Int'l Financial Service Centres (IFSCs), Int'l Banking Units (IBUs) are being allowed to participate in NDF markets w.e.f; June 1st, 2020. **** Compiled by SSK
