New Delhi: The key lending rate or the repo rate in India has been reduced to 4 per cent from 4.4 per cent, the Reserve Bank of India Governor Shaktikanta Das said during his media address on Friday. The six member monetary policy committee voted 5:1 in favour of 40 bps cut in interest rate.
This is the third presser by the RBI Governor after the COVID-19 lockdown came into place. Reverse repo rate has also been lowered to 3.35 percent.
Global economy contracted severely due to the COVID-19. The situation is no different for emerging market economies, the Governor said. He said that the world trade is likely to shrink by 13 to 32 per cent in the first quarter.
The RBI Governor also expressed hope that the inflation would be brought under control in the second half of the fiscal.
The Governor also said that consumer durables production fell by 33 per cent in March 2020 as a result of the private consumption slump.
Other important announcements
•Rs 15,000 crores to EXIM bank for 90-day-credit for US dollar swap facility.
•90-day-extension for the 90-day term loan facilities for MSME sector
•Export period credit extended to 15 months
•Moratorium on term loans extended to August 31: The existing moratorium was due to end on May 31. As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity. The EMI payments will restart only once the moratorium time period expires on August 31.
The presser assumes significance as the banking sector has to implement many schemes under the Rs 21 lakh crore economic package announced by the finance minister in five tranches last week.
The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday gave its nod for many of the schemes announced as part of 'Aatma Nirbhar Bharat Abhiyan' package to prop up the economy reeling under the COVID-19 crisis.
The RBI had on March 27 slashed the benchmark interest rate by a massive 75 basis points and also announced a three-month moratorium to be given by banks to provide relief to borrowers whose income has been hit due to the lockdown.
Earlier this month, RBI Governor Shaktikanta Das held a meeting with heads of both public and private sector banks to take stock of the economic situation and review implementation of various measures announced by the central bank.