Reserve Bank of India (RBI) governor Shaktikanta Das announced today a massive 75 basis points cut in repo rates as a measure to counter the economic slowdown caused by the Coronavirus pandemic.
Highlights of the press conference are as below:
- RBI repo rate cut by 75 basis points to 4.4%
- All banks, lending institutions may allow a three-month moratorium on all loans
- Lending companies, banks are allowed to defer interest on working capital repayments by three months. Banks may also reassess the working capital cycle and will not be treated as non-performing assets.
- Investments will be classified as HTM, even in excess of 25% requirement. The first auction of Rs 25000 crore will be conducted later on March 27
- LAF cut by 90 bps to 4%
- Cash Reserve Ratio cut by 100 bps to 3% of NTDL with effect from March 28, 2020
- Offshore Rupee NDF Market has been growing rapidly. Net Stable Funding Ratio (NSFR) was required to be introduced from April 1, 2020. Will defer NSFR implementation to October 2020
- Appreciate RBI Governor Shaktikanta Das’ reassuring words on financial stability. The 3-month moratorium on payments of term loan installments (EMI) & interest on working capital gives much-desired relief. They slashed interest rate needs quick transmission.