PM Modi hails RBI's 'giant steps' as term loan EMIs get 3-month moratorium; Repo rate cut

Prime Minister Narendra Modi hailed steps taken by Reserve Bank of India (RBI) to safeguard ecomy of country while battling dely coronavirus. dressing media on Friday, RBI goverr Shaktikanta Das anunced a series of measures including slashing repo rate and reverse repo rate, issuing a moratorium on EMIs for next three months and more. PM Modi opined that measures taken by RBI will improve liquidity, ease burden on middle class and aid businesses. 

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PM Modi welcomes RBI's measures

WATCH Most Important RBI Briefing: From Repo Rate Slash To 3-month EMI Moratorium

Here's a summary of RBI's anuncements:

Key rates slashed:  Goverr anunced a reduction in repo rate and reverse repo rate. " repo rate has been reduced by 75 basis points to 4.4 %. reserve repo rate has been reduced by 90 basis points to 4%," Das said. decision for "a sizeable reduction" in policy repo rate, according to RBI Goverr was taken to "revive growth and mitigate impact of COVID-19 and ensure financial stability." Repo rate cut - which is rate of interest at which banks borrow from RBI - will ensure banks have more access to funds, while Reverse-Repo rate cut will make it less attractive for banks to park ir funds with central bank.

projections given due to Coronavirus-induced volatility: Inflation & growth projections would be highly subject to volatility - hence, projection given, said RBI Goverr, mitting that 5.0% GDP growth forecast was under threat.

Indian banking system "safe and sound":  Goverr also said that Indian banking system is "safe and sound" and depositors should t resort to panic withdrawal of ir deposits. He urged those with deposits in private banks to t indulge in panic withdrawal. Measures were also anunced and listed to shore up liquidity. 

3 month EMI moratorium on Term loans: All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutions”) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. Accordingly, repayment schedule and all subsequent due dates, as also ter for such loans, maybe shifted across board by three months, RBI's statement says.

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This comes after minutes after influential Moody's Investors Service slashed India's 2020 GDP growth projection from its earlier forecast of 5.3% to 2.5% amid global Coronavirus pandemic. Indian government h earlier projected GDP growth at 5% in 2019-20 as compared to 6.1% in 2018-19. Q3 h witnessed a 4.7% growth. India has anunced a Rs 1.7 lakh crore Coronavirus relief pack, split between assuring food security and Direct Benefit Transfer cash-transfer as country observes a 21-day lockdown to combat COVID-19, of which over 700 infections have been confirmed thus far.

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