RBI Governor Shaktikanta Das congragulated his central bank colleagues following the development. “RBI Twitter account reaches one million followers today. A new milestone. Congratulations to all my colleagues in RBI,” Das said in a Twitter post.

Currently, the RBI handle is followed by as many as 10,00,513 people around the world.

RBI Twitter account reaches one million followers today. A new milestone. Congratulations to all my colleagues in RBI.

— Shaktikanta Das (@DasShaktikanta) November 22, 2020

RBI now has more Twitter followers than the US Federal Reserve and the European Central Bank. The world’s most powerful bank in the world US Federal Reserve has 6.77 lakh followers while the second most powerful one ECB had 5.91 lakh followers on Twitter.

RBI’s achievement is commendable, considering that the 85-year old central bank was latecomer on Twitter. Its account was created in January 2012, much later than the Twitter handles of US Federal Reserve and the European Central Bank (ECB).

The second most followed central bank on Twitter is the Banco de Mexico with 7.74 lakh followers, followed by Bank of Indonesia with 7.57 lakh followers.

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The mission of the Reserve Bank is to build confidence in the market and the economy in times of crisis. After a three-days long review meeting of the monetary policy the announcement by Governor of the Reserve Bank of India Shaktikant Das reflected the expectations of a central bank of a country.

The Reserve Bank of India has limitations on what can be done by the Central Bank of a developing country as it is impractical to print currency as some of the world’s major economies have done. Central banks in the US, Japan and Europe printed currency and marketed it during the post-COVID crisis. Such endeavour is not practical in a country like India.

The announcements made after the Monetary Policy Review meeting show that the Reserve Bank has done a lot in the current situation. Banks have not been put under much pressure but have taken balanced steps that can be adopted now. Shaktikant Das has said that the announcement to ensure liquidity will follow. This is a decision that will stimulate the economy and the market.

The Reserve Bank of India has decided to keep the repo rate and reverse repo rate unchanged. The current repo rate is four per cent. The repo rate was last reduced in May. It is not possible for the Reserve Bank to cut rates in the face of rising inflation. At present the inflation rate is 6.09 per cent. The Reserve Bank of India has adopted measures to control inflation between 2 per cent and 4 per cent. Therefore, it does not appear that the Reserve Bank will be prepared to cut rates further without reducing inflation.

Shaktikant Das said measures would be announced to increase liquidity, ease financial pressure and increase lending to the market. The announcement that medium and small micro enterprises will be given the opportunity to restructure their loans is an important one. The committee, headed by former ICICI Bank CEO K.V. Kamath, will recommend ways to restructure loans of companies. A special window will be opened for loan restructuring. This is a step towards sustainability for small and micro enterprises in crisis.

The earlier condition was that the gold loan should not exceed 75 per cent of the market value of the gold. The Reserve Bank has decided to increase this to 90 per cent. The aim of this decision is to help increase liquidity and credit to people faced with job losses and fall in income. This proposal will help in creating more funding through means such as gold loans, which are used by those who are facing job losses and income leakage. Since it is often impractical to sell gold at a high price, getting a loan of 90 per cent of the price of gold will allow households to use their gold for more financial transactions. The core of the Reserve Bank’s announcements today is to ultimately create more liquidity for companies and the general public, thereby reviving the market.

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