RBI Offers Liquidity Support Amid Coronavirus Outbreak

Amid the spread of the coronavirus in India, several industries have been hit by losses. In addition to stock markets have also seen a slump ever since the deadly virus hit China.

Now, as a pre-emptive measure to tide over any frictional liquidity requirements on account of dislocations due to COVID-19, the Reserve Bank of India has decided to conduct the following fine-tuning variable rate Repo auctions for ₹1,00,000 crore in two tranches- the first tranche of Rs 50,000 crores would be auctioned on March 23 for a tenor of 16 days and the date of reverasal will be April 8 - window timing 3 pm-3.30 pm.

The second tranche of Rs 50,000 crore would be auctioned March 24 for a tenor of 16 days and the date of reverasal will be April 9- window timing 11 am to 11.30 am. The statement issued by RBI also said that as a special case, Standalone Primary Dealers will be allowed to participate in these auctions along with other eligible participants. However, other terms and conditions as applicable to term Repo auctions will remain the same, RBI said.

The central bank said that it has been monitoring the evolving financial market conditions and will calibrate its operations to meet any need for additional liquidity support, if warranted, to ensure normal functioning of markets, promote staff welfare and preserve financial stability, RBI said in a statement.

Earlier in the day, the markets tanked over 2,800 points soon after the markets opened and Sensex hit 10% lower circuit and subsequently the trading had been put to a halt for about 45 minutes. This was the second time the trading has been halted for 45 minutes.

However, Sensex continued to crash by 3,231.25 or -10.80% at 26,684.71 after a 45 minute halt on Monday. Likewise, the broader Nifty 50 also plummeted 892.95 points or 10.21% at 7,852.50 on Monday.

This was seen as an aftermath of a high level meeting on Sunday where officials decided to put 75 districts from where individuals have tested positive for the novel coronavirus under a state of near-complete lock-down.

In India, so far, 415 people have tested positive to the virus and seven people have succumbed to it, according to the data by the Health Ministry.