The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced some major changes in the banking sector and providing relief to the citizens during the difficult economic crisis caused by COVID-19.
Das said that the Indian banks are safe and there is no need to resort to panic withdrawals as he announced several measures to counter economic fallout in the country.
Das said while addressing the media via live stream that RBI has infused Rs 2.7 lakh crore into the system since last February policy meet.
While briefing the Nation, Das requested the banks to hold EMIs for a period of the next 3 months. The development has come as the government’s relief measures amid coronavirus lockdown in the country which has affected business and may lead to economic slowdown across the world.
The RBI has also reduced repo rate by 75 basis points to 4.4 per cent and reverse repo rate by 90 basis points to 4 per cent as coronavirus relief package.
RBI has allowed all the banks that if they want then can pause on collecting EMIs for all types of term loans for a period of three months on house loans, car loans or other loans.
All commercial banks including regional rural banks, cooperative banks, NBFCs (including housing finance companies) & lending institutions are being permitted to allow a moratorium of 3 months on payment of installments in respect of all term loans outstanding as on March 1.
Shaktikanta Das said about Rs 3.74 lakh crore liquidity on an aggregate basis will be infused into the financial system to deal with the COVID-19 pandemic. Financial markets are under stress and require steps by the central bank for market stability and revival of economic growth, he said while announcing the decisions taken by the Monetary Policy Committee (MPC).
Further, RBI Governor announced a reduction in cash reserve ratio (CRR) of all banks by 100 bps to 3 percent from 4 percent, with effect from March 28 for one year. This is expected to release Rs 1.37 lakh crore liquidity in the market, he said.
• RBI puts a pause on EMIs for 3 months
• Policy Repo rate cut by 75 bps from 5.15% to 4.4%
• Reverse repo rate cut by 90 bps to 4%
• Liquidity infusion of Rs 3.74 lakh cr via the three steps announcement – LTRO, CRR and MSF
• India’s GDP growth of 5% at risk
• Actual CPI outcomes running 30 bps above projection
• Food Prices may soften further
• Banks should do all they can to keep credit flowing