"All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) ("lending institutions") are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020", the statement added.
Calling the coronavirus COVID-19 pandemic an "unprecedented threat and invisible assassin", the Reserve Bank of India (RBI) on Friday (March 27, 2020) cut the Repo Rate by 75 basis points to 4.4 per cent and slashed Reverse Repo Rate by 90 basis points to 4 per cent as part of measures to ease the pain on banks and industries which are suffering from the 21-day lockdown. The RBI will take continuous measures to ensure liquidity in the system, he added. Das said lenders can allow a three-month moratorium on internet payments on working capital facilities and on term loans, all lenders can allow three-month moratorium or repayments. The reverse repo rate now stands at 4 per cent, down 90 bps.
Das explained that this has been done to make it unattractive for banks to passively deposit funds with the RBI and instead lend it to the productive sectors.More news: Watch Idris Elba Shut Down Cardi B’s Coronavirus Conspiracy Theory
It cut the repo rate by 75 basis points to 4.40%, in line with expectations.
RBI Governor said his address was coming amidst "extraordinary circumstances". Measures were also announced and listed to shore up liquidity.
This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts for 3 months and payments will only restart once the stipulated time period expires. Offshore Rupee NDF Market has been growing rapidly.
Incremental CCB (capital conservation buffer) implementation deferred from 30 March, 2020 to 30 September 2020. "Public should not worry about their deposit in private sector banks, they should not resort to panic withdrawal", Das said.More news: Valve confirms Half-Life: Alyx, its 'flagship VR game'
"Large sell offs in markets have intensified pressure. RBI will conduct auctions of long term repo operation (LTRO) of three-year tenure upto Rs1 lakh crore at floating rate linked to policy rate", the RBI Governor said.
These measures come just hours after Moody's Investors Service cut India's growth forecasts for 2020 calendar year to 2.5% from 5.3%. He said the MPC voted for sizeable reduction in repo rate to revive growth, mitigate covid-19 impact.
Governor Shaktikanta Das had earlier signaled his willingness to cut interest rates as risks from the virus outbreak worsens.More news: USA troops possibly heading to Canadian border amid COVID-19 fears