The RBI cut the benchmark interest rate by 75 basis points to 4.4 per cent on Friday to deal with the hardship caused due to the outbreak of COVID-19.
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“The announcements will improve liquidity, reduce cost of funds, help middle class and businesses,” Modi wrote on Twitter.
Today @RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements wil… https://t.co/dxAeolEMRC
— Narendra Modi (@narendramodi) 1585291591000
The RBI today put on hold EMI payments on all term loans for three months and cut interest rate by steepest in more than 11 years as it joined the government effort to rescue a slowing economy that has now got caught in coronavirus whirlwind.
The RBI cut repo to 4.4 per cent, the lowest in at least 15 years. It also reduced the cash reserve ratio (CRR) maintained by the banks for the first time in over seven years. CRR for all banks was cut by 100 basis points to release Rs 1.37 lakh crore across banking system.
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The reverse repo rate was cut by 90 bps to 4 per cent, creating an asymmetrical corridor.
RBI governor Shaktikanta Das predicted a big global recession and said India will not be immune.
It all depends how India responds to the situation, he added.
Global slowdown could make things difficult for India too, despite some help from falling crude prices, Das said, adding food prices may soften even further on record crop production.