Here is a list of the key announcements made by the Reserve Bank of India today:

1. TLTRO 2.0

The Reserve Bank has announced a second Targeted Long Term Repo Operation of Rs 50,000 crores to start with, to ensure funds for NBFCs and microfinance institutions that were unable to get liqudity in the first round of TLTRO so far. The TLTRO amount may be increased as per requirements later.

The funds availed by banks under TLTRO 2.0 will have to be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50 per cent of the total amount availed going to small and mid-sized NBFCs and MFIs.

These investments have to be made within one month of the availment of liquidity from the RBI. As in the case of TLTRO auctions conducted earlier, investments made by banks under this facility will be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio. Exposures under this facility will also not be reckoned under the large exposure framework.

2. REFINANCING FACILITY

In view of the tightening financial conditions, RBI will provide a special refinancing facility of Rs 50,000 crore for NABARD, National Housing Bank and SIDBI to enable them to meet sectoral credit needs. This will comprise Rs. 25,000 crore to NABARD for refinancing regional rural banks (RRBs), cooperative banks and micro finance institutions (MFIs); Rs. 15,000 crore to SIDBI for on-lending/refinancing; and Rs. 10,000 crore to NHB for supporting housing finance companies (HFCs).

3. REVERSE REPO RATE CUT BY 25 BPS

RBI said that on April 15, the amount absorbed under reverse repo operations was Rs 6.9 lakh crore. To prod banks into deploying these surplus funds in investments and loans in productive sectors of the economy, RBI has reduced the fixed rate reverse repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 4.0 per cent to 3.75 per cent with immediate effect. The policy repo rate remains unchanged at 4.40 per cent, and the marginal standing facility rate and the Bank Rate remain unchanged at 4.65 per cent.

4. WAYS AND MEANS LIMIT

After allowing a 30 percent increase in the Ways And Means (WMA) limit for states earlier, the RBI has now allow an increase of 60 percent in the ways and means limit of state governments with immediate effect, valid upto September 30, 2020.

5. NPA CLASSIFICATION

For all accounts where lending institutions decide to grant moratorium or deferment announced by RBI on March 27, and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period. This means that there would an asset classification standstill for all such accounts from March 1, 2020 to May 31, 2020. NBFCs, which are required to comply with Indian Accounting Standards (IndAS), may be guided by the guidelines duly approved by their boards on this front.

However, to ensure the health of the financial system is also protected while allowing for these relaxations, RBI has asked banks to set aside an additional ten percent provisioning for all accounts where they the standstill in asset classification is applied. The additional provisions can be adjusted later on against the provisioning requirements for actual slippages in such accounts.

6. EXTENSION OF RESOLUTION TIMELINE

Under the stressed assets resolution framework of the RBI, called the June 7 circular, banks are required to set aside an additional 20 percent provision if they are unable to resolve accounts within 210 days from date of default or 180 days from turning an NPA.

RBI has now decided that the period for resolution plan can be extended by 90 days.

7. REAL ESTATE LOANS RELAXATION FOR NBFCs

RBI had earlier allowed banks to defer Date of Commercial Commencement of Operations (DCCO) of realty projects by one year if the delay for was genuine reasons outside the control of promoters. Now this benefit has also been extended to NBFCs.

8. LCR RELAXATION

RBI has brought down the LCR (Liquidity Coverage Ratio) requirement for all scheduled commercial banks to 80 percent from 100 percent currently. This will be done in a phased manner, with 90 percent LCR to be achieved by October 1, 2020 and 100 percent by APril 1, 2021.

9. DIVIDEND FROM BANKS

The Reserve Bank has said that all scheduled commercial banks will not make any dividend payout for the year ended March 2020 (financial year 2019-2020). This will be reviewed in the second quarter of FY21.

First Published:Apr 17, 2020 11:16 AM IST