The Reserve Bank of India has announced a series of relief measures for the banks, small and medium enterprises, taxpayers and the poor people. These measures, along with the economic package provided by the PM, are aimed at maintaining balanced, smooth and liquid financial markets. Also, the gold loan and gold rate India market as a whole are doing well.
- Exemption of dividends: The Reserve Bank to maintain the liquidity in the economy slashed down the reverse repo rate by 25bps to 3.75 per cent. Reverse repo rate is the rate at which commercial banks park their excess funds to the RBI. To encourage banks to lend the funds to the productive sector, RBI decided to reduce the reverse repo rate and further, there will be an exemption of dividends on this rate.
- Contribution to EPF: The government will contribute 12% each of employer and employee in the EPF fund for six months starting March 2020. Earlier, the government announced that it would provide for three months, March, April and May. This initiative will provide relief to about 3.6 lakhs establishments and provide them with the benefit of Rs 2500 crore.
- Relief to taxpayers: To provide relief to taxpayers, the government has extended the deadline for filing the IT returns to October 2020. Earlier, the date of filing the returns was 31st March 2020. The assessment and dates for GST returns have also been extended. For non-salaried payments like rent, interest, commission TDS rates have been cut by 25%.
- Loan moratorium: The government has provided a six months moratorium period for the loan borrowers. The loan borrowers can now pay the EMI of loans after August 2020 from 1st March 2020 to 31st August 2020. It will provide relief to the borrowers who do not have money to pay the loans presently.
- Cash withdrawal: On the withdrawal of cash from ATM, there will be no charges or fees during the COVID period up to 30th June 2020.
- Refinance facilities: As part of the relief announced by the RBi governor, National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, and National Housing Bank have been provided Rs. 50,000 for the refinancing of the agriculture sector. To provide aid to small and medium enterprises, banks have also been provided refinance of Rs. 50,000.
- Period for non-performing assets: RBI has also extended the time of bad loans turning to non-performing assets from 90 days to 180 days.
- Liquidity ratio: The liquidity coverage ratio for maintaining liquid assets have been reduced to 80 percent as against 100 per cent.
- Deferment of input tax credit: The government has also decided to defer the 10% restriction imposed on availing the input tax credit. The amount which is to be paid for the tenure of February- August on the input tax credit will be adjusted in the month of September.
- Digital Camera Modification: Strict rules and laws are being implemented in which the V-Chip can capture a live photo of the customer. The locations are obtained, all the documents such as Aadhar card and others are slowly tested. An authorised Reporting entity takes the picture as per the provisions mentioned in the act.
- Interest rate cut Relief: The central bank has extended the moratorium on loan repayment till August. The three-month relief has been given to everyone whose income is low due to the COVID-19 crisis. The repo rate has come to 4.4 per cent, and the reverse repo rate has begun to 3.5 per cent.
- Inflation: The economy is at a halt, and it will take time to recover. We can have a look at inflation. The inflation may remain firm in the first half of the year and yet lower down in the next half. Slowly inflation can fall up to 4 % during the period.
- GDP: As per the amendment which is made, the government has made an initiative to inject 3.2 percent of the GDP. RBI has also added that RS 2.8 Lakh crore is to be added as it is called as the liquidity.
- Also, such forms of liquidity will be deployed in the form of commercial paper, investment grade, corporate bonds and non-convertible debentures.
- Postponement of NSFR: NSFR stands for net stable funding ratio. It reduces the funding risk by requiring the banks to fund the activities with more stable resources. This act was postponed on October 1, 2020.
- Mobile Aided Note Identifier ( MANI ): This is one of the latest act passed by RBI. This is one of the provisions which is launched for visually impaired people. They can identify the currency notes with the help of intaglio printing and tactical mar, the banknote size, back colour and few signs and monochromatic patterns on the currency notes.
- Currency Notes: The RBI coordinates with the government in the process of designing the paper notes. The main aim of RBI is to ensure smooth running and providing good quality notes.
- Repo Auction: The Reserve Bank of India has announced another initiative to raise a total amount of up to Rs50 thousand crore rupees in the market. The sudden pandemic requires the release of more significant funds. An estimated amount of Rs one lakh crore rupees are to set into the market operation. This entire plan is defined as the repo auction. The idea is to be divided into two instalments.
- Relaxation in the agricultural sector: As food and fodder is our basic necessity. Thereby, there is relaxation for the agricultural industry and farmers.
- Mandis are opened. The related food-based items such as fertilizers, pesticides, seed production and other packaging units are in full support for the proper conduction of the agricultural activities.
- New Strategy: A mechanism has been set in which the reserve bank of India has formulated a medium-term started. The entire aim is to balance the economy and reach the state of macroeconomic stability. This will further ensure the smooth functioning of the macroeconomic stability and proper regulation of the markets and the institutions. Also, adequate conquering protection needs to be provided.
- A common Declaration: Mostly the entire banking system and all top banks including Canara Bank, Bank Of India, Bank of Baroda, Punjab National Bank, Bank of India, State Bank of India are taken into the loop. All the borrowers are now officially eligible for the loan moratorium.
Also, the bank will shortly announce all the details displayed on the website.
The final call about approval is done by the government. As per Section 25 of RBI Act , 1934 – all the banknotes are required to be finalised by the central government. Some of the role is designated to the government involving designing of the coins in different denominations.
While the measures have aimed to maintain liquidity in the economy. However, despite the opening of the economy, the challenge of cash-in-hand remains a crucial problem with the common man. People are continuously facing unemployment or salary cuts. Livelihood remains a cause of concern. Banks and financial institutions also face the issue of liquidity. However, in these dark times, a gold loan comes as a ray of hope for the ordinary people. Also, financial institutions are exploring the gold markets, especially the digital gold markets. The demand for gold loans is increasing because of the increase in the gold price, and the fact that the gold is lying idle with the households and also the gold loan is readily available makes it an ideal choice in these times. Financial institutions are providing gold loans with no proof of income and CIBIL score at low-interest rates.
The regime is not to be followed by only one industry. There are collectively many industries such as energy, automobile, ports, consumers, electronics, technology, real estate, and other large companies.