RBI Governor Shaktikanta Das in Mumbai. (Express photo by Nirmal Harindran)
In a slew of measures to curtail the impact of the coronavirus pandemic and the subsequent 21-day lockdown, the Reserve Bank of India on Friday cut its repo rate by 75 basis points (bps) to 4.4 per cent. Besides this, the central bank also cut the cash reserve ratio (CRR) for the banks by 100 bps to 3 per cent with effect from March 28 for the next one year.
Here is what RBI Governor Shaktikanta Das said today:
* The central bank has advanced the monetary policy committee meeting to March 25-27
* The monetary policy committee voted 4:2 majority to cut repo rate by 75 basis points to 4.4 per cent
* Rev repo reduced by 90 basis points to 4%
* Living in extraordinary situation; war effort needs to be mounted against coronavirus using conventional, unconventional tools, says Das.
* The RBI is at work; calibrating action to meet any liquidity mode, says Das
* The global slowdown can deepen with adverse implication for India; crude oil slump upside for India
* Food prices may soften further on back of record foodgrain production
* Outlook highly uncertain and negative in view of outbreak of Covid-19
Explained | Rate cut and loan-repayment moratorium: How RBI is trying to reduce pandemic stress
* Monetary policy committee refrains from giving out growth, inflation outlook for coming fiscal on uncertain outlook
* The aggregate demand may weaken
* Financial markets are under stress; require steps by central bank for market stability and revival of economic growth
* RBI to undertake repo operation of up to Rs 1 lakh crore to infuse liquidity into market
* Cash reserve ratio of all banks reduced by 100 bps to 3 per cent with effect from March 28 for 1 year; to release Rs 1.37 lakh crore liquidity
* Rs 3.74 lakh crore liquidity to be injected into system through measures announced today
* RBI permits all lending institutions to allow 3-month moratorium on payment of installments on term loans
* Moratorium on term loan, deferring of interest on working capital will not classify as default, not to impact credit history of borrower
* Banking system in India safe; deposits safe in private bank; public should not resort to panic withdrawal
* Macroeconomic fundamental stronger than those in aftermath of 2008 financial market crisis
* All instruments – conventional and unconventional – are on table to support financial stability and revive growth
* Interest on working capital facilities to be deferred by three months; such deferment not to be considered for NPA
* Revised drawing power calculations by reassessing working capital cycle
* All measures not to effect credit history
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