RBI MPC Cuts Repo Rate By 75 bps, Reverse Repo Rate By 90 bps & maintain accommodative stance

By Sarkaritel March 27, 2020 10:51

The European Commissioner on Climate Change, Connie Hedegaard meeting the MoS for Information and Broadcasting (I/C), Environment, Forest and Climate Change (I/C) and Parliamentary Affairs, Prakash Javadekar
DoT may ask private telcos to review future tie-ups with Chinese cos 0 19.Jun
Ayurved University-Jodhpur awarded by First Prize in Handicraft Fest 0 16.Jan

All retail loans including the EMI are also covered in the moratorium

Credit card payment are not covered in the 3 month moratorium.

Mumbai, Mar 72 The Reserve Bank of India (RBI) on Friday massively reduced the key lending rates in response to the COVID-19 outbreak.

Reserve Bank of India (RBI) governor Shaktikanta Das today announced 75 basis points cut in repo rates as a measure to counter the economic slowdown caused by the COVID-19 pandemic.

The reverse repo rate has been cut by 90 basis points to 4 percent. Das said this has been done to make it unattractive for banks to passively deposit funds with the RBI and instead lend it to the productive sectors.

Keeping finance flowing is the paramount objective of the RBI, while India has locker down economic activity and financial activity is under severe stress,” said RBI Governor Shaktikanta Das.

MPC voted to maintain accommodative stance, thus opening up possibilities for more future rate cuts.

All commercial banks and NBFC, are permitted to allow a three-month moratorium on payment of installments of all term loans.

RBI will conduct auctions of long term repo operation (LTRO) of three-year tenure upto Rs1 lakh crore at floating rate linked to policy rate

Monetary Policy Committee (MPC) has noted that global economic activity has come to a near stand-still as coronavirus related lockdowns and social distancing in affected countries. Expectations of a shallow recovery in 2020 from 2019’s decade low in global growth have been dashed,” says RBI Governor Shaktikanta Das while addressing media through video conferencing today.

There was a rising probability that large parts of the world economy could slip into a recession. Tough times were ahead but they don’t last, only tough institutions do, the governor said

All retail loans including the EMI are also covered in the moratorium, RBI clarified.

RBI also allowed banks and other lending institutions to extend the repayment schedule and moratorium by three months to avoid large NPAs and reduce risk weights. This would apply to all term loans as RBI also allowed all lending institutions to allow a moratorium up to three months for all loans outstanding as at March 1, 2020.

Credit card payment are not covered in the moratorium.

On the announcement made by RBI, Finance Minister Nirmala Sitaraman tweeted “Appreciate @RBI @DasShaktikanta ’s reassuring words on financial stability. The 3 month moratorium on payments of term loan instalments (EMI) & interest on working capital give much-desired relief. Slashed interest rate needs quick transmission.