Parul
In addition to rate cut, various loan moratoriums have been announced by the Reserve Bank of India (RBI) to give relief to exporters and more advances to states to deal with the economic fallout of COVID-19 pandemic.
Relief measures include extension of period for realisation and repatriation of export proceeds. It also increased ways and means advances (WMA) limit by 30 per cent from existing limit for all states and union territories.
The value of goods or software exports made by exporters currently required to be realised fully and repatriated to the country within nine months from the date of exports. “In view of the disruption caused by the COVID-19 pandemic, the time period for realization 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,” RBI said in a statement.
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.
Review of Limits of Way and Means Advances of States/UTs
Besides measures for exporters, Reserve Bank had constituted an advisory committee under the chairmanship of Sudhir Shrivastava to review the ways and means limits for State governments and Union Territories (UTs).
While waiting for the committee to give its final recommendations, the RBI has increased WMA limit by 30 percent from the existing limit for all States/UTs to enable the State Governments to tide over the situation arising from the outbreak of the COVID-19 pandemic. The revised limits will come into force with effect from April 1, 2020 and will be valid till September 30, 2020.
Implementation of countercyclical capital buffer (CCyB)
The framework on (CCyB) was put in place by the Reserve Bank in terms of guidelines issued on February 5, 2015. The guidelines said that the CCyB would be activated as and when the circumstances warranted, and that the decision would normally be pre-announced.
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.” Said RBI.
