According to historical data since 2003 provided by RBI, the lowest interest rate was 4.75% from 2009 to 2010, just after the global financial crisis. "It is meant to mitigate the negative effects of the virus, revive growth, and above all, preserve financial stability".
The governor also cautioned over the extended impact of coronavirus lockdown across the globe. The slump in worldwide crude prices could, however, provide some relief in the form of trade gains.
He further said that the growth projection of 4.7 per cent for the fourth quarter of 2019-20 and 5 per cent for the whole fiscal was at risk. The Reserve Bank in its monetary policy usually provides projections for growth and inflation. It will also be applicable on credit card dues. The ball is in now in the Centre's court to ensure that no affected person goes without a safety net in these extraordinary times.
The RBI chief noted that keeping finance flowing is the "paramount objective" of the RBI, while India has locker down economic activity and financial activity is under severe stress.
The MPC (Monetary Policy Committee) stated that the global economy has come to a standstill because of the pandemic.
Welcoming the slew of measures announced by the RBI, Sangita Reddy, president, FICCI, said, "This has been a very comprehensive set of announcements and highlights action in all the key areas that were expected".More news: Trudeau to Washington: Sending troops to border would be a mistake
Retail borrowers concerned about the impact of COVID-19 on their finances, and thus, their ability to repay their loans have got some breathing space, thanks to the Reserve Bank of India's (RBI's) mega relief package announced on Friday.
Banks may also reassess working capital cycle and will not be treated as non-performing assets, he said.
It added, "The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period".
Mumbai: The Reserve Bank on Friday allowed banks to participate in offshore non-deliverable forward (NDF) rupee markets with a view to contain volatility in the domestic currency.
On a positive note, the RBI governor assured citizens that the Indian banking system is safe and sound.
"Depositors should not resort to panic withdrawal of their deposits".More news: Joe Montana Believes Tom Brady’s Departure Was A ‘Mistake’ By The Patriots
On Thursday, Union Finance Minister Nirmala Sitharaman announced a Rs 1.7 lakh crore relief package under Garib Kalyan Yojana - in the wake of the lockdown imposed due to the spurt in coronavirus cases in the country. "Along with today's measures liquidity measures equal to 3.2% of GDP".
Last year, the central bank aggressively cut rates by a total of 135 basis points from February to October to help the government lift a slowing economy.
Central bank cuts Liquidity Adjustment Facility (LAF) by 90 bps to 4%.
Rajan Bandelkar, National Real Estate Developer Council's (NAREDCO) Maharashtra president said, "The repo, reverse repo rate and CRR cuts would extend more lending powers to the banks". The first tranche of Rs 25,000 crore will be done on March 27.
The measure is aimed at improving depth and price discovery in the forex market segments by reducing arbitrage between onshore and offshore markets, he said.More news: Spain's COVID-19 toll surpasses 4,850