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On Friday, the Reserve Bank of India announced yet another extension on the moratorium on loans by another 3 months. Initially in March 2020, RBI announced a 3-month moratorium of the payment of all term loans due between 1st March 2020 to 31st May 2020.
Shaktikanta Das, Governor of the Reserve bank of India said that the top bank will use all of its instruments and bring in new ones to tackle the challenges brought in by the deadly Coronavirus in the country.
Today another thing was done by the RBI which was a slash in the key repo rate by 40 basis points (bps) to 4%. This is expected to bring down the lending rates as well as the deposit rates.
The Monetary Policy Committee of the Reserve Bank of India voted 5-1 for the 40 basis point reduction in an off-cycle meeting, while it maintained an accommodative stance.
The Reverse repo rate automatically gets adjusted to 3.35% from 3.75% by this.
RBI Governor said, “We must have faith in India’s resilience and come out of all odds,” and added that at this point it is very difficult to comment on inflation in India.
He added, “After extensive discussions, the monetary policy committee voted unanimously for a reduction in policy repo rate and for maintaining the accommodative stance of the monetary policy as long as necessary to revive growth and to mitigate the impact of Covid-19 while ensuring that inflation remains within the target,”.
Some more statements made by RBI Chief:
- The GDP growth for 2020-2021 could be expected to remain in the negative category with some pick up only in the 2nd half.
- India is currently seeing a collapse of demand; electricity, dip in petroleum product consumption; a fall in private consumption
- In the middle of this encircling gloom, the agriculture and allied activities have, however, provided a beacon of hope for the country on the back of an increase of 3.7% in food grain production which is a new record
- The biggest blow, however, came from the nosedive of the private consumption with consumer durables production falling 33% in March 2020 alone
- Measures announced today can be divided into 4 categories: “to improve the functioning of markets, to support exports and imports, to ease financial stress by giving relief on debt servicing and better access to working capital, and to ease financial constraints faced by state governments”
- RBI to roll over Rs 15,000 crore refinance facility for SIDBI (Small Industries Development Bank of India) for 90 days
- The Export credit period which was 1 year (12 months) earlier has now been increased to 15 months
Talking about the impact of COVID-19 in the country in terms of deaths and infections reported, 1,32,919 cases of people being infected with the deadly virus have been reported till now out of which 3,901 people have lost their lives, Updated on Sunday 18:47 IST.