Liquidity bazooka for Markets – RBI Actions

We have all been following the markets reactions amidst the Covid- 19 outbreak. At individual levels, many of us might be battling financial concerns. With the nation-wide lockdown, the economy has already started taking the hit. 

However, in order to put a break to the economic slowdown, RBI announced various measures today (27th March, 2020). It will not be an exaggeration to say that Indian Central bank has upped the ante and drawn daggers on COVID-19 with vengeance! RBI has gone big with a liquidity injection of 3.74 lakh Cr which is equivalent of 3.2% of our GDP.

 Key measures:

• Repo reduced by 75bps to 4.4%. And reverse repo reduced by 90bps to 4%. After a long time LAF (liquidity adjustment facility) corridor has been widened to 40bps to push banks to lend more. MPC arrived at rate cut with a 4:2 majority and stance continues to remain accommodative.

• Liquidity Measures: 3.74L Cr liquidity infused in the system via 3 big measures
        * TLTRO (Targeted Long Term Repo Operations) up to 1Lac Cr at a floating rate linked to REPO and this liquidity will have to be deployed in Investment grade corporate papers. And these will be regarded as HTM(Hold to maturity) and not mark-to-market. This will inject the corporate market with abundant liquidity and reduce all clouds of uncertainty from NBFCs and few other corporates. 1st auction of Rs. 25000 Cr will be today.

* CRR reduced to 3% from 4% of Net NDTL.

* Liquidity under MSF (marginal standing facility) increased from 3% to 2%• Moratorium of 3months for payment of all Term Loans for all lending institutions. Separate FAQs has been released on this by the RBI.

• Deferment of 3 months on all interest payments on working capital facilities for all corporates. And none of this will result in asset downgrades.

• NSFR : Net stable funding ratio implementation has been deferred to 1st Oct, 2020.

• Implementation of Capital conservation ratio has also been delayed by 6 months

• Indian banks will now be allowed to participate in the NDF (non-deliverable forward) markets for currency trading/hedging.
One of the most important announcements was affirmation that all Private sector banks in the country are safe & sound. Stock prices are no reflection of bank’s strength and all deposit holders in the country are safe. 

Immediate implications:

• Bond yields have rallied across the yield curve. 10yr has fallen from 6.3% to about 6.0% now.

• And not just the long-end, yields have eased off across the curve and should reduce substantially on the short end given the liquidity measures.

• This is likely to remove all clouds of doubts from Liquid, Money Market and Ultra short funds. These funds should rally from hereon.

• Overnight funds will become unattractive and yields will fall substantially on those.

Moneyfront Recommendations:

• For less than 3 months money – Go for liquid funds. Suggested ones are Tata Liquid, SBI Liquid or Franklin Liquid fund.• For 3 – 6 months money – Go for Money Market Funds. Suggested ones are Pru ICICI Money Manager, Aditya Birla Money Manager fund

• For 6 – 12 months money – Go for Ultra Short funds. Suggested ones are SBI Ultra Short Fund or IDFC Ultra Short fund.

• For over 12 months parking – Go for Low Duration funds. Suggested ones are IDFC Low Duration or SBI Low duration.

• For 3 years and above – Go for Banking & PSU Debt funds. Suggested ones are IDFC Banking & PSU Debt fund, Pru ICICI Banking & PSU Debt fund. Alternatively, even Corporate Bond funds could be considered in this segment. 

Previous article5 Reasons why the World is falling apart ?
Next articleHere are the things you need to keep in mind to avail tax benefits
Pratik Sarawogi
Pratik is an MBA from IBS business school – Mumbai, with dual specialization in Marketing and Finance. He is driven by passion for markets and loves to analyze client portfolios with a long-term approach. He believes in the principle of asset allocation and diversification to maximise client return following a risk-based approach. Managing risk comes naturally to him, owing to his prior work experience with worked for ICICI Prudential Life Insurance Co. Ltd.


  1. There are many ways to keep business safe.|Think from the ways an access control system could change the field. You can experiment several combinations of key writes. Make sure the sensors are up and working without a hitch.|It is as important as web page related other works like website design, Website link structure etc. If view a certain pattern of disease inside your family, this will clue it’s possible you’ll be less lucky [url=]control gates[/url]
    Thank You!

  2. Simply want to say your article is as surprising.

    The clarity in your post is simply cool and i can assume you’re
    an expert on this subject. Fine with your permission let me to
    grab your feed to keep up to date with forthcoming post.
    Thanks a million and please continue the gratifying work.

  3. Great beat ! I wish to apprentice while you amend your web site,
    how can i subscribe for a blog web site? The account helped
    me a applicable deal. I have been a little bit acquainted
    of this your broadcast offered bright clear concept

  4. Undeniably believe that which you stated. Your favorite justification appeared to be on the net the simplest
    thing to be aware of. I say to you, I definitely get irked while people think about worries that they just do not know about.
    You managed to hit the nail upon the top and defined out the whole thing without having side effect ,
    people can take a signal. Will probably be back to get more.
    Thanks cheap flights 2CSYEon

  5. It’s awesome to pay a quick visit this website and reading the views
    of all friends on the topic of this paragraph, while I am also zealous of
    getting familiarity. cheap flights 34pIoq5

  6. Hey there would you mind sharing which blog platform you’re working with?
    I’m planning to start my own blog in the near future but I’m having a tough
    time choosing between BlogEngine/Wordpress/B2evolution and Drupal.
    The reason I ask is because your design seems different then most blogs and I’m looking for
    something unique. P.S Apologies for getting off-topic but
    I had to ask! cheap flights 3gqLYTc

  7. Woah! I’m really digging the template/theme of this blog.

    It’s simple, yet effective. A lot of times it’s difficult to get that “perfect balance” between usability and visual appearance.
    I must say you’ve done a superb job with this. In addition,
    the blog loads very fast for me on Safari. Excellent Blog!
    34pIoq5 cheap flights

  8. Hey just wanted to give you a quick heads up. The words in your content seem
    to be running off the screen in Internet explorer. I’m not sure if this is a formatting
    issue or something to do with web browser compatibility but
    I figured I’d post to let you know. The design and style look great though!
    Hope you get the problem resolved soon. Cheers

  9. Greetings I am so grateful I found your site, I really
    found you by error, while I was looking on Bing for something else, Regardless I am here
    now and would just like to say thank you for a tremendous post and a all round entertaining blog
    (I also love the theme/design), I don’t have time to look over it all at the minute but I have saved it and also added in your RSS feeds, so when I have time I
    will be back to read a lot more, Please do keep up the awesome

  10. Excellent weblog right here! Also your site loads up very fast!
    What web host are you the use of? Can I get your associate hyperlink for your host?
    I desire my site loaded up as fast as yours lol

  11. I loved as much as you’ll receive carried out right here.
    The sketch is tasteful, your authored material stylish.
    nonetheless, you command get bought an nervousness
    over that you wish be delivering the following.
    unwell unquestionably come further formerly again since
    exactly the same nearly a lot often inside case you
    shield this increase.

  12. Having read this I thought it was very informative.
    I appreciate you finding the time and energy to put
    this information together. I once again find myself spending a lot of time both reading and posting comments.
    But so what, it was still worthwhile!

  13. Thanks for your personal marvelous posting! I actually enjoyed reading it, you happen to
    be a great author. I will ensure that I bookmark your blog and will
    often come back later on. I want to encourage continue your great writing, have a nice afternoon!

  14. You are so interesting! I do not believe I’ve truly read something like that before.

    So great to discover somebody with a few genuine thoughts on this issue.
    Really.. thank you for starting this up. This site is one thing that’s needed on the web, someone with a little

  15. Heya i am for the first time here. I found this board and I
    find It really useful & it helped me out much.
    I hope to give something back and aid others like you
    aided me.

  16. Hi there! Someone in my Myspace group shared
    this website with us so I came to look it over.
    I’m definitely enjoying the information. I’m book-marking and will be
    tweeting this to my followers! Terrific blog and superb
    design and style.

  17. Howdy! I could have sworn I’ve been to this
    site before but after reading through some of the post I realized it’s new to me.

    Anyhow, I’m definitely delighted I found it and
    I’ll be bookmarking and checking back frequently!

  18. Добрый день!
    Классный путеводитель по различным автомобилям на все случаи жизни.
    Автомобиль – это не только средство передвижения, но и атрибут настоящего мужчины и самостоятельной женщины.
    Вам абсолютно не нужно выискивать на просторах необъятного и огромного интернета все автомобильные новости.
    Вам достаточно читать новостной, полезный и увлекательный онлайн журнал Rualavto и вы будете в курсе большинства новостей в автомобильном мире, как говорится будете держать руку на пульсе.
    Это чрезвычайно комфортно и удобно, не вставая с удобного, мягкого и любимого кресла быть в курсе автомобильной темы.
    В общем, если вас интересует, например:
    [url=]Калькулятор НДС[/url]
    Вам обязательно нужно посетить сайт и узнать все подробности.

  19. Wonderful goods from you, man. I have understand your stuff previous to and you are just too excellent.
    I really like what you’ve acquired here, really like what you are saying and
    the way in which you say it. You make it enjoyable
    and you still care for to keep it smart. I can’t wait to read much more from you.

    This is actually a terrific site.

  20. That is very interesting, You’re a very skilled blogger. I have joined your feed and look ahead to in the hunt for more of your magnificent post.
    Also, I have shared your website in my social networks

  21. I just want to mention I am just beginner to blogging and site-building and actually enjoyed your page. Likely I’m want to bookmark your blog post . You certainly have very good articles and reviews. Thanks a lot for sharing your web site.

  22. Pretty section of content. I just stumbled upon your website and in accession capital to assert that I acquire actually enjoyed account your blog posts. Any way I’ll be subscribing to your augment and even I achievement you access consistently quickly.

  23. I simply want to mention I am beginner to blogs and honestly enjoyed this web blog. Most likely I’m likely to bookmark your blog . You really come with awesome article content. Thanks a lot for revealing your website.

  24. Hello there, just became aware of your blog through Google, and found that it’s truly informative. I am going to watch out for brussels. I will appreciate if you continue this in future. Many people will be benefited from your writing. Cheers!

  25. Woah! I’m really enjoying the template/theme of this site. It’s simple, yet effective. A lot of times it’s difficult to get that “perfect balance” between usability and visual appeal. I must say you’ve done a excellent job with this. Also, the blog loads super quick for me on Internet explorer. Outstanding Blog!

  26. Hi there! Quick question that’s completely off topic. Do you know how to make your site mobile friendly? My website looks weird when viewing from my iphone 4. I’m trying to find a template or plugin that might be able to correct this problem. If you have any recommendations, please share. Thanks!

  27. Hiya, I’m really glad I’ve found this information. Today bloggers publish only about gossips and web and this is actually irritating. A good site with exciting content, this is what I need. Thanks for keeping this web-site, I will be visiting it. Do you do newsletters? Can not find it.

  28. Hey, you used to write magnificent, but the last few posts have been kinda boring¡K I miss your super writings. Past few posts are just a bit out of track! come on!

  29. hey there and thank you for your info – I have certainly picked up anything new from right here. I did however expertise a few technical points using this website, since I experienced to reload the site lots of times previous to I could get it to load properly. I had been wondering if your hosting is OK? Not that I’m complaining, but sluggish loading instances times will sometimes affect your placement in google and can damage your quality score if ads and marketing with Adwords. Anyway I am adding this RSS to my e-mail and can look out for much more of your respective exciting content. Ensure that you update this again soon..

  30. I simply want to mention I’m very new to blogging and seriously liked this web-site. Likely I’m going to bookmark your site . You amazingly come with very good well written articles. Thanks a bunch for revealing your website.

  31. Howdy! I could have sworn Iíve visited this web site before but after looking at many of the posts I realized itís new to me. Anyways, Iím definitely happy I found it and Iíll be book-marking it and checking back frequently!

  32. Hello There. I found your blog using msn. This is a very well written article. I’ll be sure to bookmark it and return to read more of your useful information. Thanks for the post. I’ll definitely return.

  33. I have to show my thanks to you for bailing me out of this particular scenario. After researching throughout the the web and getting things which were not powerful, I assumed my life was gone. Living without the presence of solutions to the problems you’ve solved as a result of this guide is a critical case, as well as ones that could have in a negative way damaged my career if I had not encountered your web site. Your personal training and kindness in dealing with all areas was priceless. I am not sure what I would’ve done if I had not discovered such a step like this. I can also at this point relish my future. Thanks a lot very much for this impressive and effective guide. I will not hesitate to propose your blog to anyone who would need care on this subject matter.

  34. There are some attention-grabbing cut-off dates in this article however I don’t know if I see all of them center to heart. There may be some validity however I will take hold opinion until I look into it further. Good article, thanks and we would like extra! Added to FeedBurner as effectively

  35. Hello there, I do believe your site could possibly be having web browser compatibility problems. When I take a look at your website in Safari, it looks fine however, when opening in Internet Explorer, it’s got some overlapping issues. I simply wanted to provide you with a quick heads up! Besides that, fantastic site!

  36. Hey, your site is very interesting.. Plus it was something I’m able to definitely relate with Ill constantly stop by for your blog therefore i hope you continue making fun and interesting posts like this one…

  37. Hi, I think your blog could possibly be having browser compatibility issues. Whenever I take a look at your web site in Safari, it looks fine however, if opening in IE, it has some overlapping issues. I merely wanted to provide you with a quick heads up! Apart from that, excellent blog!

  38. Hi, Neat post. There is a problem with your website in internet explorer, would check this… IE still is the market leader and a large portion of people will miss your excellent writing because of this problem.

  39. You are so interesting! I don’t suppose I’ve read a single thing like this before. So nice to find somebody with unique thoughts on this subject. Really.. thank you for starting this up. This website is something that’s needed on the web, someone with a bit of originality.

  40. I simply wanted to thank you a lot more for your amazing website you have developed here. It can be full of useful tips for those who are actually interested in this specific subject, primarily this very post. Your all so sweet in addition to thoughtful of others and reading the blog posts is a great delight in my opinion. And thats a generous present! Dan and I usually have enjoyment making use of your recommendations in what we need to do in the near future. Our checklist is a distance long and tips will certainly be put to excellent use.Leora Adkisson


Please enter your comment!
Please enter your name here