mumbai sources stated that bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) governor Shaktikanta Das announced a massive 75 basis points cut in repo rates, as a measure to counter the economic slowdown caused by the COVID-19 pandemic on Friday. He also announced a 3-month moratorium on all outstanding loans. This came just a day after the Finance minister nirmala sitharaman announced a Rs 1.7 lakh crore stimulus that included free food grains and cooking gas for the poor for three months to battle the impact of coronavirus.
Accordingly, the Monetary Policy Committee of the central bank in an unscheduled meet reduced the repo rate, the key interest rate at which the bank OF INDIA' target='_blank' title='rbi-Latest Updates, Photos, Videos are a click away, CLICK NOW'>rbi lends short term funds to commercial banks, by 75 basis points to 4.40 per cent from 5.15 per cent. Consequently, the reverse repo rate was also reduced by 90 basis points to 4 per cent. Besides, the marginal standing facility (MSF) rate and the bank Rate stand reduced to 4.65 per cent from 5.40 per cent.
He said "The purpose of this measure relating to reverse repo, is to make it relatively unattractive for banks to passively deposit funds with the Reserve bank, and instead to use these funds for lending to the productive sectors of the economy," bank OF INDIA' target='_blank' title='rbi-Latest Updates, Photos, Videos are a click away, CLICK NOW'>rbi governor Shaktikanta Das said. "The time has now come for the Reserve bank to unleash an array of instruments from its arsenal to mitigate the impact of Covid-19 and, above all, preserve financial stability".
