The Reserve Bank of India has decided to allow all lending institutions to permit a three-month moratorium on payment of installments of all loans. It has also allowed deferment of payment of interest on working capital. The steps announced by the central bank Thursday were part of its contingency plan in the wake of the coronavirus pandemic.
RBI Governor Shaktikanta Das, addressing the press, said the two steps would not be classified as default, will not impact credit history of the borrower and will not result in asset classification downgrade.
Following the meeting of the Monetary Policy Committee (MPC), the bank announced it would cut its repo rate by 75 basis points (bps) to 4.4 per cent. This apart, the reverse repo rate stands reduced by 90 bps to 4 per cent.
It refrained from giving out inflation and growth numbers due to uncertainty, while adding that the outlook for 2021 depends a lot on “intensity, spread and duration of the coronavirus”.
Das said the bank was in “mission mode” and has taken a number of steps to combat the coronavirus. “It is worthwhile to remember that tough times never last. Only tough people and institutions do,” Das said, adding that he was “optimistic” of the situation. Till date, the central bank has injected funds worth 3.2 per cent of the GDP through various instruments.
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