The RBI has asked banks
to provide a 3-month moratorium on loans and EMI repayments. It has also
reduced key repo rate by 75 basis points to 4.4 per cent in order to revive
growth as India battles coronavirus. Shaktikanta Das RBI governor on Friday announced that its Monetary Policy
Committee (MPC) decided to have its meeting in view of the Covid-19 crisis and
voted for a massive reduction in repo rate in order to lessen economic risks.
The MPC meeting, which was earlier scheduled for March 31-April 3, and was rescheduled to March 25-27 in view of the deteriorating economic situation in the country.
MASSIVE REPO RATE CUT
MPC has voted for interest rate cut to
the tune of 75 basis points, bringing the
repo rate down to 4.4 per cent from 5.15 per cent. The reverse repo rate has
also been reduced by 90 basis points to 4 per cent in a bid to maintain
financial stability and revive growth.
RBI Governor said that the position remains very uncertain and going forward much will depend on how India battles Covid-19 pandemic. “The outlook is now heavily contingent upon the intensity, spread and duration of the pandemic. There is a rising probability that large parts of the world will slip into recession,” Das added.
noted that global economic activity has come to a near stand-still as Covid-19
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,” Shaktikanta Das said.
EMI, LOANS ON HOLD
also announced that banks are permitted to allow a three-month moratorium for
on payment of EMIs on all term loans that were outstanding on March 1.
However, the banks will have the authority to take the final decisions to provide such a relief in the loans. This is seen as a very important point made in the RBI’s announcements as many people have been financially affected due to the lock down implemented to prevent novel coronavirus from spreading in India. But it remains to be seen as to what extent this helps customers.