Deadline for meeting last tranche of capital conservation buffer extended

ing and electricity generation pulled industrial production into positive territory in January 2020 after intermittent contraction ...however, more data will need to be watched to assess whether the recent uptick will endure in the face of COVID-19," Das said.

Referring that anecdotal evidence suggests that several services such as trade, tourism, airlines, hospitality and construction have been further adversely impacted by the pandemic, he said dislocations in casual and contract labour would result in losses of activity in other sectors as well.

Das said price pressures remain firm across protein-rich items, edible oils and pulses, "but the shock to demand from COVID-19 may weaken them going forward".

"Looking ahead, food prices may soften even further under the beneficial effects of the record foodgrains and horticulture production, at least till the onset of the usual summer uptick. Furthermore, the collapse in crude prices should work towards easing both fuel and core inflation pressures, depending on the level of the pass-through to retail prices. "As a consequence of COVID19, aggregate demand may weaken and ease core inflation further," Das said.

MUMBAI: In view of hardship faced by outbreak of COVID19, the Reserve Bank of India on Friday extended the dead

line for meeting last tranche of capital conservation buffer (CCB) by another six months.

The move would leave about Rs 35,000 crore capital in the hands of banks for lending to on-lending to productive sectors of the economy.

This would help banks increase lending by over Rs 3.5 lakh crore by leveraging ten times of the capital.

"Considering the potential stress on account of COVID19, it has been decided to further defer the implementation of the last tranche of 0.625 per cent of the CCB from March 31 to September 30, 2020," RBI Governor Shaktikanta Das said while unveiling a slew of measures to fight the impact of the pandemic on the economy.

Currently, the CCB of banks stands at 1.875 per cent of the core capital. Sharing the decisions of RBI'S seventh bi-monthly monetary policy review, the governor said the CCB is designed to ensure that banks build up capital buffers during normal times, that are outside periods of stress which can be drawn down, as losses are incurred during a stressed period.