MUMBAI, April 17 (Xinhua) -- India's Central Bank has initiated liquidity infusion by announcing a reverse repo rate by 25 basis points to 3.75 percent along with offering 6.53 billion U.S. dollar by way of bonds on Friday.
This fresh infusion will support the fund requirement of the three state-owned financial institutions including National Bank for Agriculture and Rural Development, Small Industries Development Bank of India and National Housing Bank that will expand bank credit along with liquidity.
Last month, the Reserve Bank of India had announced special targeted long-term repos operations (TLTRO bonds) worth 13.07 billion U.S. dollar to ease liquidity conditions in the financial system following the COVID-19 pandemic that had brought the economy to a standstill with the nationwide lock-down.
Stating that the country's economic situation has worsened since he last spoke, India's Central Bank - Reserve Bank of India Governor Shaktikanta Das expressed confidence by saying "surplus liquidity in the banking system has increased substantially as a result of the central bank's actions."
"Early developments suggest that inflation is on a declining trajectory, having fallen by 170 basis points from its January 2020 peak. In the period ahead, inflation could recede even further, barring supply disruption shocks and may even settle well below the target of 4 percent by the second half of 2020-21. Such an outlook would make policy space available to address the intensification of risks to growth and financial stability brought on by COVID-19," the governor said.
India has already announced guidelines to relax certain areas from the nationwide lockdown which has been extended to May 3.
On March 27, RBI had substantially reduced the repo rate by 75 basis points from 5.15 percent to 4.40 percent to push growth in the already slowing economy and the move today will further ease liquidity.
As per the official update on Friday, India has 11,201 active cases of novel coronavirus with 437 deaths so far.
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