RBI Governor Shaktikanta Das
RBI Governor Shaktikanta Das
Mitesh Bhuvad

Reserve Bank of India (RBI) Governor Shaktikant Das held a press conferance on Monday in the wake of the spread of coronavirus in India affecting the financial markets.

However, the market was expecting a rate cut, given the way other central banks have reacted to the crisis in the global financial system due to the Covid-19 pandemic.

Here are the key takeaways from RBI Governor Shaktikant Das's presser:

Long-term repo operations

The Reserve Bank on Monday announced it will conduct the fifth tranche of the long-term repo operations (LTROs) for Rs 25,000 crore on March 18, in its bid to secure adequate liquidity to the troubled financial markets.

The central bank has already conducted four such operations of Rs 25,000 crore each since February 14 with huge success as the issue has been overbought multiple times.

The regulator also said based on further review of evolving liquidity conditions, more LTROs will be announced separately.

Before the first LTRO was announced at the February 6 monetary policy review, the longest tenor of a repo operation was 14 days while the vast majority of repos are sold overnight.

Dollar-rupee swap

The central bank also announced the details of the second dollar-rupee swap for USD 2 billion on March 23.

Taking into consideration the requirement of US dollars in the market, it has been decided to undertake another 6-month dollar sell/buy swap auction to provide liquidity to the forex market for USD 2 billion.

The first such swap was conducted today for USD 2 billion and both the measures are to shore up liquidity which even though is huge surplus to the tune of Rs 3 lakh on a daily basis.

YES Bank rescue plan

He aslo assured that crippled Yes Bank has enough funds to meet any requirements and promised that the central bank will step in with additional liquidity support if needed.

The assurance comes at a time when there is a worry that once the moratorium is lifted on March 18 evening, there can be a run on the bank, putting more liquidity pressure.

Under the reconstruction scheme, which the governor said is progressing as planned, the private lender has received over Rs 10,000 crore from eight financial institutions, including Rs 6,050 crore from SBI.

ICICI Bank and HDFC (Rs 1,000 crore each) Axis Bank (Rs 600 crore), Kotak Mahindra Bank (Rs 500 crore), Bandhan Bank, Federal Bank (Rs 300 crore each) and IDFC First (Rs 250 crore) also joined the SBI-led consortium and invested in Yes Bank.

The government notified the Yes Bank reconstruction scheme late last Friday. With that, the moratorium on the bank will be lifted by March 18.

(For all the latest News, Mumbai, Entertainment, Cricket, Business and Featured News updates, visit Free Press Journal. Also, follow us on Twitter and Instagram and do like our Facebook page for continuous updates on the go)

Free Press Journal

www.freepressjournal.in