RBI Releases one more relief measure: Cuts the repo rate and extends the moratorium period of term loan

RBI Releases one more relief measure: Cuts the repo rate and extends the moratorium period of term loan

As lockdown 4.0 is being introduced by central govt. till 31 March 2020 RBI again takes necessary measures to give relief to the borrower of India in this pandemic RBI Governor Shaktikanta Das announced on Friday 22 March 2020 while addressing the media, a slew of measures aimed at further easing the liquidity conditions and providing relief to the borrowers just a few days after the government concluded unveiling its five tranches of Rs 20 lakh crore worth of stimulus.

RBI cuts interest rates and extends loan moratorium by another 3 months

• RBI extended moratorium on term loans till August 31
• RBI’s monetary policy committee (MPC) has cut repo rates by 40 basis points to 4%

Reserve Bank of India (RBI) Governor Shaktikanta Dasagain reduced the repo rate by 40 basis points i.e. from 4.4% to 4% and also extended moratorium on all term loans by another 3 months i.e. till 31 august 2020. Since after the lockdown began, Mr.Das had slashed the benchmark interest rate (repo rate) by a massive 75 basis points and also announced a three-month moratorium to be given by banks to provide relief to the borrowers whose income has been affected due to the lockdown. The loan moratorium has now been extended till August 31 for 6 months.

RBI said on Inflation

“The inflation outlook is highly uncertain. As supply lines get restored in the coming months with gradual relaxations in the lockdown, the unusual spike in food inflation in April is expected to moderate. The forecast of a normal monsoon also portends well for food inflation”. RBI governor shaktikanta das said that RBI will continue to be vigilant and will take whatever measures are needed to be taken due to the Covid-19 pandemic. It is said that GDP growth of India is expected to remain in negative category for the long time and India will have to face the inflation for a uncertain period

Shaktikanta das further added that India is seeing collapse of demand; electricity, dip in petroleum product consumption; fall in private consumption. Government revenues have been impacted severely due to slowdown in economic activity amid COVID-19 outbreak. Mr.Das said that we are trying to be proactive.

Following measures taken by RBI:

• RBI has increased export credit period to 15 months from 1 year.
• RBI will extend ₹15,000 crore line of credit to EXIM Bank
• Loan moratorium extended by another 3 months till August 31.
• Government 10-year bond yields slumped 15 basis points after the repo rate cut.
• India’s foreign exchange reserves have increased by 9.2 billion during 2020-21 from 1st April onwards. So far, up to 15th May, foreign exchange reserves stand at 487 billion USD.
• MPC, which met off-cycle, voted in the ratio of 5:1 in favour of the repo rate cut
• RBI MPC cuts repo rate cut by 40 basis points from 4.4 % to 4%. Reverse repo rate stands reduced to 3.35%.
• Repo rate cut by 40 basis points.