The Reserve Bank of India (RBI) has announced a series or additional measures for dealing with the coronavirus (COVID-19) pandemic.
In a statement on the RBI website, the central bank said it has extended the realisation period of export proceeds, has reviewed limits of ways and means advances (WMA) to states and union territories (UTs), and has put in place a framework for implementation of countercyclical capital buffer (CCyB).
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Here is what these measures entail:
Extension of realisation period of export proceeds: Under this, the time period for realisation and repatriation of export proceeds for exports made up to or on July 31, 2020 has been extended to 15 months from the date of export.
Presently value of the goods or software exports made by the exporters is required to be realized fully and repatriated to the country within a period of nine months from the date of exports. The leeway has been granted in view of the disruption caused by the COVID-19 pandemic, RBI said.
“The measure will enable the exporters to realise their receipts, especially from COVID-19 affected countries within the extended period and also provide greater flexibility to the exporters to negotiate future export contracts with buyers abroad,” it added.
Review of limits of WMA of states and UTs: The central bank had constituted an Advisory Committee chaired by Sudhir Shrivastava. Pending final recommendations from the committee, it has decided to increase WMA limit by 30 percent from the existing limit.
This will be applicable for all states and UTs with effect from April 1 to till September 30 this year.
Implementation of CCyB: While the framework was put in place in February 2015, its activation was advised “as and when the circumstances warranted,” the RBI said. The framework envisages the credit-to-GDP gap as the main indicator, which is used in conjunction with other supplementary indicators.
Based on the review and empirical analysis of CCyB indicators, it has been decided that it is not necessary to activate CCyB for a period of one year or earlier, as may be necessary.
Earlier on March 27, RBI Governor Shaktikanta Das announced a massive 75 basis points cut in repo rates as a measure to counter the economic slowdown caused by the COVID-19 pandemic. The reverse repo rate was cut by 90 basis points to 4 percent. Das said this and a host of other measures injecting Rs 3 lakh crore into the economy, has been done to make it unattractive for banks to passively deposit funds with the RBI and instead lend it to the productive sectors.Follow our full COVID-19 coverage here