RBI slashes repo rate by 40 bps,says GDP growth in negative territory in 2020-21

The RBI also extended the moratorium on payment of loans by another three months till August to provide much-needed relief to borrowers whose income has been hit due to the coronavirus crisis.

 

 MUMBAI:

The Reserve Bank of India on Friday,in line with the industry expectations, slashed its key policy rate for a second time this year, in a move to counter the economic fallout from an ongoing nationwide lockdown to contain the spread of the novel coronavirus.

 

It cut the repo rate by 40 basis points to 4%. The reverse repo rate was also reduced by 40 basis points to 3.35%.

 

In a video conference, RBI Governor Shaktikanta Das said the central bank’s Monetary Policy Committee (MPC) had voted to maintain its “accommodative” stance.

 

"RBI's Monetary Policy Committee met again from May 20-22. MPC voted to 5:1 majority to reduce the policy repo rate by 40 basis points from 4.4 to 4 per cent," Das said on Friday..
 

Das said the GDP growth in India in 2020-21 is estimated to remain in the negative territory and the inflation outlook is highly uncertain due to the outbreak of the COVID-19 pandemic and expressed concern over elevated prices of pulses. He also said there is a need to review import duties to moderate prices.

 

The RBI also extended the moratorium on payment of loans by another three months till August to provide much-needed relief to borrowers whose income has been hit due to the coronavirus crisis.

 

In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1, 2020, and May 31, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, were shifted across the board by three months.

 

Some key announcements by the RBI-

-RBI to roll over Rs 15,000-crore refinance facility for SIDBI for 90 days
-RBI increases export credit period to 15 months from 1 year
-RBI to extend Rs 15,000-cr line of credit to EXIM Banker
-Inflation forecasting has become complicated due to (poor) data collection
-Industrial production shrank by close to 17 per cent in March with manufacturing activity down by 21 per cent
-Output of core industries contracted by 6.5 per cent


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