In a surprise move, the RBI Governor Shaktikanta Das reduced the repo rate from 4.4% to 4%. Also, the moratorium on banks was extended by another three months due to the extended lockdown. It was his address to media after the government announced 20.97 lakh crore stimulus to the economy.
Highlights of RBI’s announcements
• Monetary Policy Committee of RBI decided the repo rate to 4% from the existing 4.4%. It is the lowest repo rate since 2000. The central bank also sliced the reversed repo rate to 3.35% from the existing 3.75%.
• RBI extended the loan moratorium for another three months period starting from June 1 to August 1. This move is expected to bring relief to the working class whose income is badly hit by the pandemic.
• Governor Shaktikanta Das projected the gross domestic product (GDP) to shrink in the current financial year. The disruption of economic activities is the reason behind low GDP. But the governor expressed confidence that the economy would be revived by the second half of the financial year ending March 31, 2021.
• The Export-Import Bank of India is allocated Rs. 15,000 crore to support trade activities. The EXIM Bank provides financial assistance to exporters and importers.
• SIDBI is given another 90-days for the 90-day term loan facilities. It is done in order to provide liquidity to the MSME sector that has been badly hit by the coronavirus pandemic.