Reserve Bank of India offers more sops to ease compliance burden
The apex bank has extended realisation period of export proceeds to give more time to exporters to comply with regulations
The Reserve Bank of India has announced new measures to ease the compliance burden on sectors of the Indian economy most affected by the coronavirus scare.
Accordingly, it has extended realisation period of export proceeds to give more time to exporters to comply with regulations.
Presently, the value of goods or software exports made by exporters is required to be realized fully and repatriated to the country within nine months from the date of export. The time period for exports made up to or on July 31, 2020, has been extended to 15 months from the date of export.
“The measure will enable the exporters to realise their receipts, especially from COVID-19 affected countries within the extended time period and also provide greater flexibility to them to negotiate future export contracts with buyers abroad,” the RBI said in a statement.
The apex bank has also decided to increase Ways and Means Advances (WMA) limit by 30 per cent for all States/uts to enable these to tide over the situation arising from the coronavirus pandemic. The revised limits will come into force with effect from April 1, 2020 and will be valid till September 30, 2020.
The RBI had set up an Advisory Committee under the Chairmanship of Sudhir Shrivastava to review the ways and means limits for States/ UTS. The decision to increase the limit has been taken even though its final recommendations are pending.
In yet another decision, the RBI has decided not to activate countercyclical capital buffer (CCYB) for one year or earlier, as may be necessary. This would free banks from maintaining a capital buffer at a time when there is a need to boost investment climate in the economy by offering easy credit to industry. The framework on CCYB was put in place by the RBI in terms of guidelines issued on February 5, 2015 wherein it was advised that the CCYB would be activated as and when the circumstances warranted, and that the decision would normally be pre-announced. The framework envisages the credit-to-gdp gap as the main indicator, which is used in conjunction with other supplementary indicators.
Meanwhile the government on Tuesday steeply cut interest rates on various small savings schemes in line with sharp cut in policy rates announced by the Reserve Bank of India on Friday where it reduced repo rate by 75 basis points.
Accordingly, rate on interest on small savings schemes such as the Kisan Vikas Patra, the National Savings Certificate, the Senior Citizens Savings Scheme and the Public Provident fund (PPF) scheme has been revised downwards between 70 basis points and 140 basis points for the first quarter (April-june) of FY 20 20-21.
Interest rates on the PPF and the Sukanya Samriddhi Yojana have been cut by 0.8 per cent or 80 bps each. Post office time deposits have seen the sharpest cut of 1.4 per cent or 140.
The PPF scheme that is subscribed by millions of salary earning class will get you an annual return of just 7.1 per cent as against 7.9 per cent earlier. Senior citizens will also have to do with just 7.4 per cent interest rate from the earlier 8.6 per cent. Even, the popular five year recurring deposit will get you just 5.8 per cent now.
The banks will automatically defer your EMIS by three months. Customers who receive EMI payment notice at the beginning of every month can heave a sigh of relief as banks have decided to defer receiving such payments for a period of three month under the terms of a Covid 19- RBI package announced on Friday.
Several banks, including State Bank of India, sent tweets on Tuesday informing the customers that they have deferred payment of EMIS of housing loan, vehicle loans, MSME loans and payment of all other term loans whose installentins are due after March 1 and up to May 31 by three months.
The system of deferment will function automatically as most banks would not raise demand for EMIS for next three months. The repayment period post the moratorium will also get extended accordingly.
The scheme would be available to all borrowers having standard account with the bank, meaning they have no record on default in the past.
However, customers who do not want to defer their EMIS and want to continue paying their loan instalment will have to inform banks that they don’t need to utilise the moratorium on payments.
Banks have also issued mailers and put FAQS on their sites informing the customers about the scheme. It is expected that several customers may opt out of the EMI deferment as during the the said moratorium period, interest shall continue to accrue on the outstanding portion of the term loan. The interest accrued will be added to the outstanding loan amount and the repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period.