It reduced the Cash Reserve Ratio (CRR) of all banks by 100 basis points to 3% of Net Demand and Time Liabilities with effect from the fortnight beginning March 28 for a period of 1 year. This would release primary liquidity of Rs 1,37,000 crore across the banking system.
RBI's MPC (Monetary Policy Committee) noted that global economic activity has come to a near stand-still as COVID-19 related lockdowns & social distancing in affected countries. Expectations of a shallow recovery in 2020 from 2019's decade low in global growth have been dashed, RBI Governor Shaktikanta Das said.
Das said that the implied GDP growth rate of 4.7% in Q4 of 2019-20 is now at risk. Most sectors of economy, apart from agriculture and allied activities, will be adversely affected due to COVID-19 pandemic, depending on intensity, spread and duration of the pandemic.
He added that the outlook is now heavily contingent upon the intensity, spread & duration of the pandemic. There is a rising probability that large parts of the world will slip into recession.
He further stated that RBI is monitoring evolving market and macroeconomic situation. Looking ahead, food prices may soften further. Projection of growth and inflation depends on spread, intensity and duration of virus, hence RBI is not giving any guidelines on growth and inflation.
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