Ready To Ensure Covid-19 Effects Mitigated: RBI Governor Shaktikanta Das
The central bank is taking measures to ensure financial markets remain sound, the Governor said
The Reserve Bank of India has several instruments at its command and stands ready to ensure that effects of Covid-19 are mitigated, Governor Shaktikanta Das said at a press briefing on Monday. "The domestic liquidity condition remains comfortable and we will, if required, take more steps as appropriate. ..Need to ensure we do not use up all our ammunition before necessary," the RBI Governor emphasized.
It is important that policy reactions are carefully calibrated and the central bank is taking measures to ensure financial markets remain sound, the Governor said. He also assured that the central bank will take stock of the evolving situation at the next Monetary Policy Committee (MPC) meet and hinted that all measures, including a possible rate cut, could be on the table.
According to estimates, the coronavirus could shave off 0.4 per cent to 1.5 per cent of global growth. India isn't immune to the impact of coronavirus, the RBI Governor admitted. Covid could impact India directly through various trade channels, especially in situations where the exposure to China is high. The tourism, airline, hospitality, trade and transport sectors are affected globally and in India, the governor pointed out.
The US Federal Reserve had cut the key interest rate by 100 basis points to a target range of 0-0.25 per cent overnight and there were speculations that the RBI governor may make an announcement on similar lines at the press briefing.
He also stressed on the use of digital payments in order to avoid going into crowded places.
The RBI also announced two important liquidity enhancing measures, including another round of 2 billion dollar-rupee swap on March 23 and up to Rs 1 lakh crore to address any sudden liquidity requirements in the banking system."
Ahead of its scheduled press briefing, the Reserve Bank of India issued an advisory to deal with the impact of coronavirus.
RBI said that it is devising strategy and monitoring mechanism concerning the spread of the disease within the organisation, making timely interventions for preventing further spread in case of detection of infected employees and avoiding spread of panic among staff and members of the public.
The RBI also said that it wants banks and financial institutions to "take stock of critical processes and revisiting Business Continuity Plan (BCP) in emerging situations with aim of continuity in critical interfaces and preventing any disruption of services, due to absenteeism either driven by individual cases of infections/preventive measures.