The announcements by the RBI will improve liquidity, reduce cost of funds, help middle-class and businesses, says Modi
The central bank cuts the repo rate by 75 basis points to 4.4% with immediate effect in an unscheduled meeting
Prime Minister Narendra Modi on Friday lauded the Reserve Bank of India’s (RBI) decision to cut benchmark interest rates, three-moratorium on payment of installments, along with other measures on term loans will help the middle-class and the businesses deal with the 21-day nationwide lockdown in the wake of COVID-19 pandemic.
“Today RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle-class and businesses," Modi said in a tweet.
Reserve Bank of India Governor Shaktikanta Das, earlier during the day announced a host of measures to alleviate financial stress, build confidence and keep the financial system sound. The central bank cut the repo rate by 75 basis points to 4.4% with immediate effect in an unscheduled meeting. It also cut the bank rate to 4.65% from 5.40%.
Das also announced several measures to inject Rs3.74 trillion liquidity into the system, among several other measures. The central bank also allowed banks, non-banking financial companies (including housing finance companies) and other financial institutions to allow a three-month moratorium on payment of installments on term loans to combat the disruption caused by the coronavirus outbreak.
The coronavirus disease has disrupted business activities, led to factory shutdowns, closure of schools and colleges and all mode of transportation. The spread of the virus is expected to delay a recovery in India’s growth, which has in recent months been battling a slump in consumption.
Measures announced by the central bank comes a day after the government rolled out a Rs1.7 trillion relief package, to limit the economic damage caused by the coronavirus outbreak and tackle the loss of livelihood of millions of poor three-week lockdown.
The relief package--Prime Minister Garib Kalyan Yojana--is expected to mitigate the hardships and support migrant workers, farmers, urban and rural poor and women. This will include a cash transfer scheme as well as a food security programme for the poor.
Coronavirus has affected more than 420,000 individuals globally, with death toll at over 18,000. It has led to deaths in several countries including the developed nations such as the US, Italy, United Kingdom, Germany among others. In India, there are over 700 confirmed cases, with 17 deaths.