has made major announcements after the Finance Ministry to save the economy from further losses. Reserve Bank Governor Shaktikanta Das on Friday, announced a reduction in repo rate, reverse repo rate and CRR. Apart from this, he has also announced relief for the borrowers.
The Reserve Bank has cut the repo rate by 0.75 percent. After the cut, the repo rate has come down to 4.4%. This will make the loan cheaper in the coming days. RBI Governor Shaktikanta Das said, “The reverse repo rate has been reduced by 0.90 percent. Cash Reserve Ratio (CRR) was cut by 1 percent. The CRR comes in at 3 percent.” He further added that a reduction in the repo rate would help to deal with the economic impact of the coronavirus epidemic.
There is a nationwide lockdown due to Coronavirus. This has a direct impact on the income and business of the people. In such a situation, people have difficulty in repaying loans. The Reserve Bank has announced relief for the loan holders by stating that there will be a 3-month moratorium on all term loans. This means that EMI will not be deducted from anyone’s account for three months. EMI repayment will start only after three months. The Reserve Bank has implemented it from March 1, so now you have to pay EMI from June itself. However, keep in mind that the EMI has not been waived, but has been deferred for three months. If your loan was to end in January in 2021, then it will end in April 2021.
The RBI governor said that withholding of interest payments on working capital would not be considered an omission, it would not affect the credit history of the borrower. He also assured the people that the country’s banking system is strong. Deposits in private banks are also absolutely safe. People should not panic and withdraw money.
RBI also pushed for more liquidity in the system to help banks increase liquidity to help businesses when the lockdown is removed. He said, “A multi-pronged approach, comprising both targeted and system-wide liquidity provision, has been adopted to ensure that COVID-19 related liquidity constraints are eased.”
Das has also announced:
— Auction of targeted long term repo operations of 3-year tenor for total amount Rs 1,00,000 crore at a floating rate.
— Reduction of CRR for all banks by 100 basis points. Will release Rs 1,37,000 crore across the banking system.
— Accommodation under the Marginal Standing Facility to be increased from 2% from SLR to 3% with immediate effect till June 30. It will release Rs 1.37 lakh crore into the system.
Combined, these three measures will make available a total of Rs 3,74,000 crore to the country’s financial system.
These decisions have been taken by the Monetary Policy Committee of the Reserve Bank. The committee was scheduled to meet on March 31, but it was executed prematurely amid a growing crisis caused by the coronavirus. The Reserve Bank has taken several steps to reduce the damage caused to the economy by the coronavirus.
