RBI announces no rate cut; to provide liquidity requirement to Yes Bank, if there is a requirement: Shaktikanta Das

The RBI governor said a decision on the interest rate will be taken in the MPC meeting

FP Staff March 16, 2020 16:47:09 IST
RBI announces no rate cut; to provide liquidity requirement to Yes Bank, if there is a requirement: Shaktikanta Das

Unlike what was anticipated, Shaktikanta Das, governor, the Reserve Bank of India (RBI), did not announce a repo rate cut. He said, rate decision will be taken in the MPC meeting.

"I'm not ruling out any possibility (on rate cut). We are estimating impact of COVID-19 and we will give our growth estimates in MPC,"  he said.

RBI announces no rate cut to provide liquidity requirement to Yes Bank if there is a requirement Shaktikanta Das

File image of RBI governor Shaktikanta Das. News18

In the presser on Monday, the governor chose to focus on  Yes Bank and aspects related to fallout of coronavirus and its impact on economy.

At the outset, the governor assured depositors of Yes Bank that their money with the private lender is 'completely safe'. There is no need (for depositors) to rush to withdraw it, he said.

Addressing a presser on Monday, Das said never has a scheduled commercial bank lost money and the present scheme too protects the depositor's money.

"After 6 pm on 18 March, depositors can withdraw their money. There is no need for panic withdrawal", he reiterated.

Yes Bank has enough liquidity to meet any requirements, Das said. If there is a requirement, the RBI will provide necessary support if such a requirement arises, he said. 

The interaction with banks -- state, private banks, makes the RBI hope that the revival plan is robust, the RBI governor said.

The moratorium on Yes Bank will be lifted on 18 March at 6 pm. New board will assume position on 26 March and administrator will vacate office, he said.

The RBI has written to all state governments that the Indian banking sector is 'sound and safe' and this includes the private banking sector, Das said. There is no reason for state government authorities to withdraw money or to keep away from private sector banks.

Sectors like tourism, hospitality, airlines and others are being affected due to the COVID-19 outbreak, Das said, adding that there exists a considerable uncertainty about duration of pandemic.

The RBI has been taking some calibrated measures to ensure financial markets and institutions remain sound and resilient.

The RBI has several instruments at its command and stands ready to take all necessary measures to mitigate impact of COVID-19 on Indian economy.

Base on current evaluation, the RBI proposes to conduct another six months US dollar/ Rupee sell-buy swap on 23 March; will conduct LTRO in multiple tranches upto a total amount of Rs 1 lakh crores at the policy rate. This will be followed by a review of performance of LTRO, he said.

The coronavirus outbreak rapidly evolving into a human tragedy. India is not immune to this pandemic, over 100 cases already reported. COVID-19 could impact economic impact in India directly through sectors where exposure to China is relatively high, Das said.

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