NEW DELHI, April 17 (Xinhua) -- President of the Indian Chambers of Commerce and Industry (FICCI) Sangita Reddy on Friday welcomed the fresh measures announced by the Reserve Bank of India (RBI) to ensure enough liquidity in the economy in the wake of lockdown due to the COVID-19 pandemic.

The economic measures were announced to boost especially the farming activity, small businesses and refinancing institutions. These measures were mainly aimed at helping the farming community as harvest season is going on, particularly in north India.

Earlier in the day, Reserve Bank of India (RIB) Governor Shakrikanta Das said an amount of 50,000 crore Indian Rupees (6.7 billion U.S. dollars) would be provided to the refinance institutions like the National Bank For Agriculture & Rural Development (NABARD), the Small Industries Development Bank of India (SIDBI), and the National Housing Bank (NHB).

A similar amount would be given to the other non-banking financial institutions (NBFCs), added Das. He also announced a cut of 25 basis points in Reverse Repo Rate (RRR) from 4 percent to 3.75 percent.

Commenting on the RBI announcements, the FICCI president said that the move would help countering the negative impact of COVID-19 on the economy.

"The economy and industry need a heavy dose of liquidity infusion and the financial intermediaries need the confidence that the steps they take to support industry in this hour of crisis will be viewed leniently and not attract regulatory actions in terms of asset reclassification and attended provisioning. Today's announcements show the RBI moving the ball in both these areas and FICCI is encouraged by this stance," added Sangita.

"We are glad that the RBI has announced that liquidity to the tune of 50,000 crore Indian Rupees will be made available to NBFCs and MFIs and that banks availing funds under this window will be required to make investment in financial instruments issued by NBFCs within a month of availing such funds," she said.

Additionally, the special refinancing line offered to NABARD, SIDBI and NHB to the tune of 50,000 crore rupees should further add to the flow of funds to NBFCs, micro finance institutions (MFIs), and Small & Medium Enterprises (SMEs), added the FICCI president.

According to her, the reduction in the RRR further from 4 percent to 3.75 percent should disincentivize banks from going in for risk free parking of funds and instead look at channeling funds to the productive sectors of the economy.

"We feel the RBI could have reduced the reverse repo rate by a larger quantum as the need today is to have liquidity flow into the system," she suggested. Enditem

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