3 min read.Updated: 27 Mar 2020, 11:52 AM IST Written By Nikhil Agarwal
RBI's monetary policy committee (MPC) met from March 24-27 and voted for a sizeable reduction in repo rate
RBI today permitted all lending institutions to allow a 3-month moratorium on payment of installments on term loans
NEW DELHI :
A day after finance minister Nirmala Sitharaman released a ₹1.7 lakh crore package to combat the impact of the 21-day coronavirus lockdown, Reserve Bank of India (RBI) Governor Shaktikanta Das today cut interest rates by 75 basis points to 4.4%. He also announced several measures to inject ₹3.74 lakh crore liquidity into the system.
The RBI said it was maintaining its "accommodative" stance, and would maintain its position "as long as necessary" to revive growth, while ensuring inflation remained within target.
Updates of RBI Governor Shaktikanta Das's address:
-Comments: Rumki Majumdar, Economist, Deloitte India: "The extent of the policy rate cut and the LTRO operations indicate the willingness of the policymakers to ensure liquidity in the system. After all, businesses must have access to funds to run their day-to-day operations and service debt. Today’s move indicates that the government is now focusing on different ways to cushion the economy from the COVID-related impact and to position businesses for eventual recovery once the crisis is over (and it will eventually be over). The much-needed policy coordination between the government and the RBI, as we are seeing now, will be key in fuelling the eventual recovery."
-Comments: NITI Aayog CEO Amitabh Kant said, "I compliment the RBI Governor on putting this moratorium of 3 months and also waving off interest and bringing down the repo rate This is the way to go. This is a progressive and timely measure."
-RBI has last reduced CRR on February, 2013, by 25 basis points.
-Rupee rallies 81 paise to 74.35 against USD after RBI announced various measures to support economy.
-Macroeconomic fundamental stronger than those in aftermath of 2008 financial market crisis
-RBI to undertake repo operation of up to ₹1 lakh crore to infuse liquidity into market: Das
-Moratorium on term loan, deferring of interest on working capital will not classify as default, not to impact credit history of borrower.
-Funds at banks safe. No need for panic withdrawal: Das
-Fallacious to link share prices with safety of deposits: RBI
-RBI will continue to remain vigilant and take whatever steps are required to mitigate the impact of Covid-19
- ₹2.8 lakh crore liquidity measures taken.
-Financial markets are under stress; require steps by central bank for market stability and revival of economic growth.
-NSFAR implementation deferred by 6 months
-All banks and NBFCs are being permitted to allow a 3-month moratorium on payment of term loans: Das
-Outlook highly uncertain and negative in view of outbreak of Covid-19: Das
-Monetary policy committee refrains from giving out growth, inflation outlook for coming fiscal on uncertain outlook: RBI Governor.
-Food prices may soften further on back of record foodgrain production: RBI Governor.
-The outlook is now heavily contingent upon the intensity, spread & duration of the pandemic. There is a rising probability that large parts of the world will slip into recession: RBI Governor Shaktikanta Das
-MPC noted that global economic activity has come to a near stand-still as COVID-19 related lockdowns and social distancing in affected countries. Expectations of a shallow recovery in 2020 from 2019's decade low in global growth have been dashed: RBI Guv
-CRR (cash reserve ratio) of all banks to be cut by 100 bps to 3%: Shaktikanta Das
-RBI is calibrating action to meet any liquidity mode: Das
-Living in extraordinary situation; war effort needs to be mounted against coronavirus using conventional, unconventional tools: Das
-Time has now come for the RBI to launch an array of arsenals to mitigate the impact of Covid-19
-Finance is the lifeline of the economy: Das
-Strong fiscal measures are critical: Das
-Slump in crude oil prices could provide some relief: Das
-Reverse repo-rate reduced by 90 basis points to 4%: Das
-Das said the MPC has decided to cut the repo rate by 75 basis points to 4.4%.
-MPC voted for rate cut.
-This address comes under extraordinary circumstances: Das
-RBI Governor's address begins.
-“The market is enthused that the RBI may finally be coming to deliver a rate cut and possible unlimited money infusions," said Shrisha Acharya, a fixed-income trader at DCB Bank Ltd. in Mumbai. Yields on 10-year bonds may drop to 6.10% soon, he said.
-Bonds rallied on expectations that the RBI will act in an emergency meeting or at the scheduled review on April 3.
-Both Sensex and Nifty were trading higher ahead of the announcement.
-RBI Governor Shaktikanta Das's press conference will begin shortly.
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