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Business News/ News / India/  Financial regulators to brainstorm on covid-19 fallout with FM today
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Financial regulators to brainstorm on covid-19 fallout with FM today

Financial sector reforms may also come up for discussion
  • Crisil, Goldman Sachs and Fitch Ratings have projected the Indian economy to contract 5% during the current fiscal
  • Union finance minister Nirmala SitharamanptiPremium
    Union finance minister Nirmala Sitharamanpti

    NEW DELHI: Finance minister Nirmala Sitharaman on Thursday will chair a meeting of the Financial Stability and Development Council (FSDC) amid the ongoing debilitating impact of the coronavirus pandemic on the economy and the financial sector.

    Thr meeting will have the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Insolvency and Bankruptcy Board of India, Pension Fund Regulatory and Development Authority, among others, and secretaries and senior officials in the ministry of finance as well, in attendance.

    It will take stock of the disruption caused by the lockdown on financial institutions and devise ways to deal with it. Financial sector reforms may also come up for discussion.

    This is the first meeting of FSDC since November last year.

    The covid-19 pandemic has thrown the global economy into its worst recession since the Great Depression in the 1930s, and India is not exception. Domestic economic growth is expected to contract for the first time in forty years in FY21.

    Crisil, Goldman Sachs and Fitch Ratings have projected the Indian economy to contract 5% during the current financial year. The Centre has announced a 20.9 trillion financial package including reform measure to help mitigate the economic fallout of the pandemic and the consequent lockdown.

    The FSDC meeting is also likely to review the implementation of the package through greater coordination among various financial regulators.

    Sitharaman has committed to suspend fresh bankruptcy proceedings against defaulters for one year so that companies are not dragged into tribunals at a time they are trying to get back on their feet. The government will also make provisions in the law to exclude all debt associated with the pandemic from defaults covered under the Insolvency and Bankruptcy Code (IBC) for triggering action against defaulters by creditors.

    The central bank has recently taken a spate of measures to infuse more liquidity in the economy. The RBI last week lowered the repo rate further by 40 basis points to a historic low of 4%, well below the 4.75% level to which it was brought down in April 2009 in the aftermath of the US subprime-led global financial crisis. Consequently, the reverse repo rate was reduced to 3.35%. It has also extended the duration of the refinancing facility for Sidbi by 90 days, the moratorium on term loan instalments by another three months and the working capital facilities in the form of overdraft provided by lending institutions by three months.

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    Published: 28 May 2020, 09:10 AM IST
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