Thread by @monikahalan

The @RBI press conf about to begin. I will be live tweeting what it means for us.
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Will be making announcements. Hang in for a lengthy meeting!
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Now quoting Mahatama Gandhi.
Please get to it Gov!
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Now thanking everybody
Not unlike an Oscar speech!

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Assessment of eco situation:
Macro and financial landscape is down
IMF global growth projections - recession ahead
The Great Lockdown - 9 t USD is the loss to the global economy
India is among the few that will cling on to positive growth of 1.9%

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IMF projects a V shaped recovery
India expected to see a sharp bounce back in FY22
Agri is still strong, and this has good linkages with other sectors
But industrial output was up, but impact of covid not accounted for
Auto sales are down, electricity gen is down...

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External sector: exports are hurting (obviously)
But forex reserves are good (we have plenty of money for imports)

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Banking: online payments are doing fine (we know that and thank you so much, specially a shout out to @UPI_NPCI)
No shortage of currency
ATMs have cash

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Financial conditions have eased (there is plenty of liquidity in the system - markets wont freeze. This is very important for the comatose economy to have the oxygen to continue to breathe)

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Now come the measures:
1. Liquidity management
Money put into the system by the RBI has gone largely to state gov bonds and large companies
TLTRO2.0: targetted long term repo operations: 50,000 cr to begin with for various other market segments

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This money is for NBFC bonds, specially for small and mid-sized NBFCs and for MFIs
Investments have to be made within a month
(Basically the money loosened by RBI got eaten by the big guys, now Rs 50k cr for the smaller guys)

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All India financial institutions like NABARD, SIDBI and NHB
Rs 50,000 cr refinance facility
Targetted for MSMEs, agri and housing finance
RBI will give more if needed, also have to see if they are actually using the money

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LAF - liquidity adjustment facility
Surplus liquidity is up
RBI is tracking how much banks are putting back into RBI
reverse repo rate: 25 bips cut - 3.75%
NO CHANGE in repo rate

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(So banks are still putting surplus money back with RBI. So they are reducing the int on the money banks get with money with RBI. RBI is telling banks: LEND, transmit the money we have given. Banks are going: no, no, mummy is safer)

Asset classification changes
(the way that regulators mark non perfiorming assets etc changes allowing more elbow room)

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For moratoriam accounts, 90 day NPA norm will exclude the 90 day period.
(Where banks have given this facility, those will not be counted as badly performing loans)
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RBI's existing rules on resolution of stressed assets changed. Extended by 90 days to allow more elbow room.
Distribution of dividend: Banks and cooperative banks shall not make any dividend payouts (This is BIG - RBI is saying, don't distribute your profits)

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For commercial real estate: (this is going to be very badly stressed sector - no surprise)
NBFC loans to this sector will see some relaxation of rules

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Review of recent developments
CPI inflation for march down by 70 bips to 5.9%
Softening of food inflation
But this till March 19, 2020
(This is good news, gives more elbow room for policy to take action, so more money can be pumped into the system)

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We shall cure
We shall endure

and ends

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The @RBI Gov speech is here:
rbidocs.rbi.org.in/rdocs/Content/…

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In short: RBI says lend. Banks say: you are safer, we keep our money with you and big companies that already have money.
RBI reduces interest on money banks keep in RBI (reverse repo down by 25 bips)
RBI gives Rs 50,000 crore to banks to lend to MFIs and NBFCs (TLTRO 2.0)