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RBI announces more measures to deal with economic fallout of COVID-19

In a statement, the RBI said presently value of goods or software exports made by the exporters is required to be realised fully and repatriated to the country within a period of 9 months from the date of exports.

, ET Bureau|
Last Updated: Apr 01, 2020, 02.33 PM IST
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NEW DELHI: After providing relief to borrowers and financial markets to handle the disruption caused by the Corona Virus disease (COVID-19) , the Reserve Bank has now come to the rescue of state governments, exporters and also provide relief to banks' capital concerns. It has not only enhanced state government's short-term liquidity needs, but relaxed export repatriation limits from nine months to 15 months and also said that capital conservation buffer may not be activated for a year

The government has decided to enhance the WMA- a temporary facility to meet revenue mismatches- limits to states and union territories ahead of the recommendations of a committee it constituted for the purpose. "It has been decided to increase WMA limit by 30 percent from the existing limit for all States/UTs to enable the State Governments to tide over the situation arising from the outbreak of the COVID-19 pandemic" the Reserve Bank said in a release. The revised limits will come into force with effect from April 1, 2020 and will be valid till September 30, 2020. Reserve Bank had constituted an Advisory Committee under Sudhir Shrivastava to review the Ways and Means limits for State Governments and Union Territories.

In addition RBI has decided to extend of realisation period of export proceeds. "the time period for realization and repatriation of export proceeds for exports made up to or on July 31, 2020, has been extended to 15 months from the date of export" RBi said. Presently value of the goods or software exports made by the exporters is required to be realized fully and repatriated to the country within a period of 9 months from the date of exports. Thr measure will help exporters realise their receipts, especially from COVID-19 affected countries within the extended period and also provide greater flexibility to negotiate future export contracts with buyers abroad.

Besides, the central bank may not implement countercyclical capital buffer(CCyB) framework, according to which CCyB would be activated as and when the circumstances warranted, and that the decision would normally be pre-announced. " Based on the review and empirical analysis of CCyB indicators, it has been decided that it is not necessary to activate CCyB for a period of one year or earlier, as may be necessary" RBI said. The buffer is a prudential measure to meet the funds ratio of banks dy=uring adverse market conditions.


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