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Reverse Repo Rate Cut by 25bps, Refinance Facility for NABARD, SIDBI, NHS Announced

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 17, 2020 4:56 PM 5 min read
Editorial

RBI announces measures to support the economy amidst nationwide lockdown. Fixed rate reverse repo rate cut by 25 basis points to 3.75% from 4%. All-India financial institutions, such as NABARD, SIDBI and NHB, will be provided a special refinance facility of ₹50,000cr. MHA issues revised guidelines regarding services that will be allowed to operate during the lockdown period. TCS share price jumps over 7.9%. China's economy shrinks, ending half a century-long growth. 

 

  

RBI

RBI announces measures to support the economy amidst nationwide lockdown. 

The Good, The Bad, The Ugly

For the second time since the nationwide lockdown began on March 25th, RBI Governor Shaktikana Das held a press conference announcing measures to support the economy in these trying times.

 

"The mission is to minimise the epidemiological damage in the country due to coronavirus. I want to convey the RBI's resolve and the way forward," said the RBI governor. [BS]

 

Here are the highlights:

  • The fixed rate reverse repo rate has been cut by 25 basis points to 3.75% from 4%
  • The RBI will conduct targeted repo operations for an amount of ₹50,000cr ($6.5bn) “to begin” with in tranches of appropriate sizes [Livemint]
  • All-India financial institutions, such as NABARD, SIDBI and NHB, will be provided a special refinance facility of ₹50,000cr ($6.5bn)
  • States’ Ways and Means Advances (WMA) limit increased by 60%. Increased limit available till September 30th 2020
  • Moratorium period to be excluded from 90-day NPA period [News18]

You can read the Governor’s statement in its entirety here.

 

RULES

MHA issues revised guidelines regarding services that will be allowed to operate during the lockdown period. 

Ease Out

The Ministry of Home Affairs has issued revised guidelines regarding services that will be allowed to operate during the lockdown period in addition to those allowed in its guidelines released on April 15th. [CNBC TV18]

 

These include:

  • Non-Banking Financial Institutions (NBFCs) including Housing Finance Companies (HFCs) and Micro Finance Institutions (NBFC-MFIs) with bare minimum staff
  • Cooperative credit societies
  • Collection, harvesting and processing of minor forest produce non-timber forest produce by scheduled tribes and other forest dwellers in forest areas
  • Bamboo, coconut, cocoa, spices plantation and their harvesting, processing, packaging, sale and marketing.

 

ICYMI

Here are the guidelines issued by the MHA on April 15th.

 

Government expected to increase MSP of minor forest produce by 16-30% to help tribals during extended lockdown. 

Prep Talk

The relaxation in collection, harvesting and processing of minor forest produce that includes non-timber items such as tendu, sal, etc. During the extended lockdown comes on the heels of reports that the Government is expected to increase the minimum support price (MSP) of these minor forest produce by 16-30% to help tribals during this period. [BS]

 

MONEY

Government to collate data on losses, salary cuts and delayed payments. 

Call to Mercy

The Employees Provident Fund Organisation (EPFO) and Employees State Insurance Corporation (ESIC) have been asked to collate data on job losses, salary cuts and delayed payments to get a sense of worst-affected sectors as well as workers impacted by the closure of establishments post-lockdown.

 

The Government has previously issued an advisory to employers to not cut salaries or fire employees and be considerate during these difficult times. [ET Policy]

 

Waiting for Godot?

The Government had announced that in order to help taxpayers in the COVID-19 pandemic situation, the pending income tax refunds up to ₹5L ($6,595.68) will soon be issued.

 

Here's how you can ensure that you get IT refund in 5-7 days. [Financial Express]

 

COMPANIES

TCS share price jumps over 7.9%. 

Bracing for Impact

Shares of IT major TCS rallied over 7.9% today before closing at ₹1,810.00 (+5.47%) as it managed to protect margins and report record deal wins in Q4.

 

The IT firm reported 5.1% growth in consolidated revenue for the fourth quarter and said it would not lay off employees and would honour all new job offers, including to around 40,000 new graduates.

 

As per Edelweiss Securities, TCS earnings were not immune to the pandemic, but the company clocked another exemplary quarter on the execution front, as margins came in largely flat Q-o-Q (25.1%, in line with estimate) aided by a strong Dollar. It also bagged record deal wins of $8.9bn in total contract value (TCV). [ET Markets]

 

Zoom to tighten security measures.

Bug Bounty

Videoconferencing platform Zoom is rolling out a number of security measures as accusations of data hacking and harassment by individuals who crash sessions rise.

 

By week’s end, paid account holders will be able to select which regions their data is routed through during their sessions in a move apparently aimed at concerns over information passing through China where it might be subject to snooping.

 

Zoom also said that it is working with cyber-security firm Luta Security to overhaul processes and its “bug bounty” programme that pays rewards to researchers who find security flaws in its operations. [AFP]

 

CHINA

China's economy shrinks, ending half a century-long growth. 

The Chinese Dragon Comes to A Screeching Halt

The Chinese economy shrank 6.8% in the first three months of the year compared with a year ago, showed government statistics released on Friday, on back of the coronavirus pandemic.

 

This brings decades-long of continuous growth to a screeching halt. [CNN Business]

 

Did You Know

This is the first time China has reported an economic contraction since 1976, when Communist Party leader Mao Zedong's death ended a decade of social and economic turmoil.

 

The Chinese economy had shrunk 1.6% that year.

 

Wuhan revises death toll up by 50%.

 The Truth Half Untold?

Wuhan, the Chinese city at the epicenter of the coronavirus pandemic, revised its death toll up by 1,290 to 3,869 - a 50% from its previous count. [Quartz]

FIN.

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