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The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday made some key policy announcements to help the struggling economy due to the coronavirus pandemic.

The four key announcements by the Indian central bank chief were:

1. TLTRO 2.0: Long-term repo operations (TLTROs) worth Rs 50,000 crore to help non-banking financial companies (NBFCs).

2. A special refinance facility for Rs 50,000 crore has been granted to NABARD, SIDBI & NHB. Out of this NABARD has got Rs 25,000 crore, SIDBI Rs 15,000 crore and NHB Rs 10,000 crore.

3. The RBI has also reduced the fixed reverse repo rate by 25 bps. i.e. from 4 percent to 3.75 percent.

4. WMA limit of state governments has been increased by 60 percent and this will be available till September 30, 2020.

These announcements have been taken positively by the markets as well as economists and bankers.

Former RBI deputy governor, HR Khan told CNBC-TV18 that the measures announced are "sufficient but not sustainable".

IBA Chief, Sunil Mehta said that the liquidity injection would help in lending more. "Once accounts don’t slip into NPA, bankers will be willing to lend. Bankers will now be able to lend to SMA accounts," he explained.

Former planning commission chief, Pronab Sen summarised, "The RBI governor is walking a tightrope. The government must act. RBI is trying to keep the entities alive till the lockdown ends."

Market veteran Rashesh Shah was positive about LTRO 2.0. " LTRO Is going to help the bond markets and thus NBFCs. We will need more measures going forward. Cash inflows are 5 percent of normal but outflows are 40-50 percent of normal."

Keki Mistry of HDFC said, "My sense is it is a deferment of dividend, not cancellation. Non-payment of dividend won't make a difference to us from an accounting standpoint."

First Published:Apr 17, 2020 12:23 PM IST