RBI rolls out more relief measures to fight virus

Taking the fight against covid-19 crisis a step further, the Reserve Bank of India has rolled out more relief measures from its kitty. The central bank acknowledged the states’ role in mitigating the impact of the pandemic and announced numerous steps to help states tide over the repercussions of this spiraling health exigency.

It raised the borrowing limit by 30% of all states & Union territories under the ways and means advances (WMA) facility for the period 1 April to 30 September. This was done with the intention to help them overcome the mismatch between revenue and expenditure flows because of the unprecedented 21-day nationwide lock down.

The bank also extended realization period for export proceeds and deferred the implementation of counter cyclical buffers. The counter cyclical capital buffer (CCB) was introduced as part of Basel-III, as an additional risk mitigation measure, in the aftermath of the 2008 financial crisis. It required banks to stash away a portion of their profits as reserves even in boom times.

On 31 March, RBI increased the short-term borrowing limit of the central government as well to provide a cushion to the states to carry on their essential activities and normal financial operations in the face of this crisis. 


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