Piyush Goyal welcomes RBI's Repo rate slash, says it'll translate to demand increase

Union Minister Piyush Goyal on Friday welcomed the Reserve Bank of India's (RBI) move to slash repo rate and reduce the reverse repo rate stating that it will provide affordable credit to MSMEs and boost demand amid COVID-19 crisis. Goyal added that the RBI’s decision will help the country is achieving its vision of ‘Aatmanirbhar Bharat.’

Earlier in the day, the RBI reduced the repo rate by 40 basis points to 4 per cent and extended the loan repayment moratorium for another three months. The reverse repo rate now stands at 3.35 per cent.

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RBI slashes repo rate, extends loan moratorium

Reserve Bank of India (RBI) Governor Shaktikanta Das while addressing the media on Friday announced that the Repo rate has been slashed by 40 basis points from 4.4 % to 4%. The Reverse repo rate has been reduced to 3.35%: and the MSFand Bank rate has been cut down to 4.25%. In his last address on April 17, the RBI governor had slashed the reverse repo rate under liquidity adjustment facility (LAF) from 4% to 3.75%. The consecutive cut in the Repo rate - the rate at which the central bank lends money to banks - takes it to its lowest point ever, in an effort to get banks to pass on the benefit to consumers and spur the investment cycle. 

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The RBI Governor's press brief is in regards to the central bank's own measures totaling an estimated Rs 8 crore of the Aatmanirbhar Bharat package. Das also announced that the loan moratorium will be extended till August 31. 

"Three-month moratorium we allowed on term loans and working capitals with certain relaxations. In view of the extension of the lockdown and continuing disruption on account of COVID19, these measures are being further extended by another 3 months from June 1 to August 31," said the RBI Governor.

This is the second consecutive extension of the moratorium on loans which makes it a six-month moratorium since March.

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