The Reserve Bank of India is ready to go conventional and take measures to deal with COVID-19, Governor Shaktikanta Das said on Wednesday morning.
He said the second purchase of government securities worth Rs 35,000 crore under the G-sec Acquisition Programme (G-SAP 1.0) will be done on May 20 for an orderly evolution of the yield curve as a fresh COVID-19 wave threatens to hit the economy.
The first purchase of Rs 25,000 crore last month received enthusiastic response from the market, Reserve Bank of India (RBI) Governor Shaktikanta Das said while announcing slew of measures to provide relief to various segments of economy hit by the second wave of the pandemic.
RBI will do second purchase of government securities (G-secs) aggregating Rs 35,000 cr in two weeks, he said.
To provide clarity on its bond-buying programme through open market operations (OMO), Das had announced Rs 1 lakh crore target for the first quarter under the new instrument called G-SAP 1.0.
On the rate of price rise, he said, food and fuel inflation have pushed core inflation.
Expected normal monsoon forecast should help contain food price inflation, he
The RBI Governor, in an unscheduled announcement, said banks are being incentivised to extend swift credit to weak sectors. Banks will create a COVID loan book in their balance sheets and can park money equal to COVID book with RBI at 40 bps above reverse repo rate, he said.
At 10.40 AM, the Sensex was up 231.42 points or 0.48 percent at 48484.93, and the Nifty was up 73.40 points or 0.51 percent at 14569.90.
Announcing relief measures, Das said, individuals, small businesses, MSMEs with exposure of up to Rs 25 crore who have not availed One time restructuring will be eligible for Resolution framework 2.0. The borrowers must be standard as of March 31, 2021 to be eligible for Resolution framework 2.0, Das said.
Small Finance Banks (SFB) will be permitted to lend to small MFI's with asset size of Rs 500 crore. This facility will be available till 31st March'22.
The Central Bank will conduct a special 3-year long-term repo operation of Rs 10,000 crore at repo rate or Small Finance Banks. A limit of Rs 10 lakh per borrower has been set for the SFB scheme and the offer will be open till October 31, 2021. SFB on-lending to MFIs to be categorised as a priority sector, Das said.
“We have lessons to draw from our experience of last year when as a nation we came together and overcame the once in a generation challenge imposed by the first wave of the pandemic,” Das said. “Our faith should be like an ever burning lamp which not only gives us light, but also illuminates the surroundings,” Das concluded.