RBI reduces the rate, extends the loan relief : RBI

RBI Announcements: RBI reduces the rate, extends the loan relief

Term loan moratorium extends to August 31, 2020–

• The debt moratorium will be continued to August 31, 2020. Which gives it a six-month moratorium.

Interest deferral on working capital–

• Interest on working capital is deferred by another 3 months, i.e. until 31 August 2020.

Conversion of interest on working capital to fixed-term loans–

• Loan agencies is permitted to turn accrued interest on working capital facilities over the deferment period (until August 31, 2020) into a secured interest-term loan (repayable by March 31, 2021).

The margin for Working Capital –

• Drawing Power – Lending institutions was required to return working capital margins to the original amount by 31 March 2021.

Reduce the repo rate by 40 bps to 4%.

• The interest rate should then be reduced.

Export Credits–

• Maximum Allowable Export Credit (Pre and Post Shipping) extended from 12 months to 15 months.

Payment against imports–

• Extension of the time limit to allow payments against imports from 6 months to 12 months

Help to EXIM Bank–

• Facility of Rs 15.000 crore credit line for 90 days for US dollar swap facility will be given to EXIM Bank.

Extension of Resolution Timelines–

• Deferment or moratorium time shall be removed when measuring the 180-day resolution deadline.

Group Financing –

• Group exposure increased from 25% to 30%

SIDBI support –

• In order to provide greater flexibility to SIDBI, a further 90-day extension of the 90-day loan facility will be offered.

Trade Impact –

• Loan moratorium shall have no effect on improvements in asset classification, financial history, and aging requirements, etc.

Trade Impact–

• The volume of world trade can fall by 13 percent-32% this year.
• RBI Announcements on 22/05/2020

Interest rate levels of different central banks along with inflation

Below given table showing the interest rate levels of different central banks along with inflation no for latest period same for the previous month.

Country	Reference	Earlier	Now	Reference	Earlier	Now
United Kingdom	Dec-21	0.1	0.25	Nov-21	4.2	5.1
United States	Dec-21	0.25	0.25	Nov-21	6.2	6.8
Saudi Arabia	Nov-21	1	1	Nov-21	0.8	1.1
South Korea	Nov-21	0.75	1	Nov-21	3.2	3.7
Switzerland	Dec-21	-0.75	-0.75	Nov-21	1.2	1.5
Japan	Dec-21	-0.1	-0.1	Oct-21	0.2	0.1
Euro Area	Dec-21	0	0	Nov-21	4.1	4.9
France	Dec-21	0	0	Nov-21	2.6	2.8
Indonesia	Dec-21	3.5	3.5	Nov-21	1.66	1.75
South Africa	Nov-21	3.5	3.75	Nov-21	5	5.5
China	Dec-21	3.85	3.85	Nov-21	1.5	2.3
Italy	Dec-21	0	0	Nov-21	3	3.7
Netherlands	Dec-21	0	0	Nov-21	3.4	5.2
Spain	Dec-21	0	0	Nov-21	5.4	5.5
Australia	Dec-21	0.1	0.1	Sep-21	3.8	3
Canada	Dec-21	0.25	0.25	Nov-21	4.7	4.7
Mexico	Dec-21	5	5.5	Nov-21	6.24	7.37
Russia	Oct-21	6.75	7.5	Nov-21	8.1	8.4
Brazil	Dec-21	7.75	9.25	Nov-21	10.67	10.74
Turkey	Dec-21	15	14	Nov-21	19.89	21.31
Argentina	Oct-21	38	38	Nov-21	52.1	51.2
India	Dec-21	4	4	Nov-21	4.48	4.91
Germany	Dec-21	0	0	Nov-21	4.5	5.2

• Except for South Korea, all of these countries have higher inflation than India. The question is when the RBI will take the plunge and raise the repo rate.
• Because the omicron strain’s path is unknown, growth will always be a risk for the entire global economy. It may not be possible to ignore inflation as temporary or driven by supply-side forces for much longer.
• The central bank will have to make a decision here because, while CPI inflation is within tolerance, WPI inflation offers a different tale that is difficult to ignore. Currently, we can expect the RBI to tighten in stages: first, addressing liquidity, then boosting the reverse repo rate, and eventually, raising the repo rate.

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Post by Rajput Jain & Associates