India's central bank announces measures to ensure liquidity amid COVID-19 lockdown

Source: Xinhua | 2020-03-28

The Reserve Bank of India (RBI) on Friday announced a slew of measures to ensure liquidity in the country's economy amid the 21-day lockdown and fears among the bank depositors as some private banks' shares falling in the past few days.

Addressing a press conference televised live on TV channels, RBI Governor Shaktikanta Das ensured the countrymen that the banking system in India was "safe," and appealed to them not to resort to panic withdrawal of their deposits with banks.

"It was fallacious to relate banks' share prices to deposits' safety," said Das, appealing to adopt digital payments and not indulge in cash transactions.

In a bid to ensure liquidity in the country's economy, the RBI's top official announced to reduce repo rate by 75 basis points to 4.4 percent, and reverse repo rate by 90 points to 4 percent. They also permitted banks a three-month moratorium on payments of installments of all loans and interest on working capital.

The Cash Reserve Ratio (CRR) for all banks was also reduced by 100 basis points to 3 percent, which would release 137,000 crore Indian Rupees (around 18.3 billion U.S. dollars) into the Indian economy.

The minimum CRR balance for all banks was also reduced to 80 percent from 90 percent.

According to Das, all these measures would inject a total 374,000 crore Indian Rupees (around 50 billion U.S. dollars) into the Indian economy, ensuring enough liquidity.

The death toll due to COVID-19 in India rose by one to 17 on Friday, the country's Health Ministry announced, with the number of confirmed COVID-19 cases rising to 724.