KEY HIGHLIGHTS From RBI Governor's MPC Address: 06th August 2020
RBI Monetary Policy August 2020:
? The Monetary Policy Committee maintains an accommodating stance, to revive growth by keeping the REPO Rate unchanged @4%
? Borrowing costs in the financial markets have dropped lowest in a decade due to abundant liquidity. Commercial papers of NBFC's have softened to 3.8% on 31.07.2020. NBFC's have access to funding at reasonable costs.
? Monetary transmission has improved considerably. Weighted Avg. Lending rate declined by 162 basis point on Fresh Rupee Loans (issued between Feb 2019 to June 2020)
Additional Liquidity Measures:
? Additional Special Liquidity facility of Rs 10,000 Crore will be provided to NABARD (Rs 5,000 crore) and National Housing Bank (Rs 5,000 crore) at the policy Repo rate.
? It has been decided to provide a window under the June 7, 2019 framework of the RBI to enable lenders to implement resolution plan in respect of eligible Exposures without change in ownership & in respect of personal loans, while classifying them as Standard Assets subject to certain conditions.
An Expert Committee formulated under the Chairman Ship of Mr. KV Kamath for making recommendations on the required Financial Parameters along with sector specific benchmarks to be factored into the resolution plans mentioned above.
? Stressed MSMEs will be eligible for Restructuring Debt provided accounts are classified as 'Standard' till March 1, 2020 under the Existing Framework. The central bank will amend the priority sector lending guidelines to remove regional disparity. The loans to start-ups will get the priority sector lending tag. This restructuring shall be implemented by 31st March 2021
? Loan to Value (LTV) of 90% (which was earlier 75%) will be provided for the jewellery sector
This relaxation shall be available till 31.03.2021
? Priority sector lending guidelines have been reviewed in order to align them with National Priorities & Focus on Inclusive Developments. An incentivisation scheme will be launched for banks.
? An innovation hub will be set up by the Reserve Bank of India in the near future. Online dispute mechanism for digital payments will be introduced.
? Mechanism of Positive Pay shall be introduced for all cheques having value Rs. 50,000/- and above. Operational Guidelines for the same is awaited
? A scheme for retail payment in offline mode using cards, mobile devices etc and an online dispute resolution mechanism for digital payments shall also be introduced.