Published 11:55 IST, March 27th 2020
Chidambaram welcomes RBI's Repo rate cut but calls EMI moratorium ambiguous & half-hearted
Congress leader P Chidambaram called the RBI's direction on the deferment of EMIs as ambiguous and half-hearted & called for date to be automatically deferred
Senior Congress leader P Chidambaram called the Reserve Bank of India's direction on the deferment of EMIs as ambiguous and half-hearted and called for the dates to be automatically deferred. Reacting after RBI governor Shaktikanta Das announced a series of measures to ease the economy amid the battle with coronavirus, P Chidambaram welcomed RBI's decision to cut the repo rate and for introducing measures to provide more liquidity. Further, the senior Congress leader said that he had asked for the due dates falling before June 30 to be deferred and that the borrowers would be disappointed as they would have to be dependent on the bank concerned.
Chidambaram's reaction to RBI's measures
Here's a summary of RBI's announcements:
Key rates slashed: The Governor announced a reduction in the repo rate and the reverse repo rate. "The repo rate has been reduced by 75 basis points to 4.4 %. The reserve repo rate has been reduced by 90 basis points to 4%," Das said. The decision for "a sizeable reduction" in the policy repo rate, according to the RBI Governor was taken to "revive growth and mitigate the impact of COVID-19 and ensure financial stability." The Repo rate cut - which is the rate of interest at which banks borrow from RBI - will ensure banks have more access to funds, while the Reverse-Repo rate cut will make it less attractive for banks to park their funds with the central bank.
No projections given due to Coronavirus-induced volatility: Inflation & growth projections would be highly subject to volatility - hence, no projection given, said RBI Governor, admitting that the 5.0% GDP growth forecast was under threat.
Indian banking system "safe and sound": The Governor also said that the Indian banking system is "safe and sound" and depositors should not resort to panic withdrawal of their deposits. He urged those with deposits in private banks to not indulge in panic withdrawal. Measures were also announced and listed to shore up liquidity.
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 the global Coronavirus pandemic. The Indian government had earlier projected GDP growth at 5% in 2019-20 as compared to 6.1% in 2018-19. Q3 had witnessed a 4.7% growth. India has announced a Rs 1.7 lakh crore Coronavirus relief package, split between assuring food security and Direct Benefit Transfer cash-transfer as the country observes a 21-day lockdown to combat COVID-19, of which over 700 infections have been confirmed thus far.
Updated 11:55 IST, March 27th 2020