RBI uses bazooka to fight virus with 75 bps rate cut, moratorium on term loan repayments

The Print | Mar 27, 2020 at 5:45 AM
  • The Reserve Bank of India (RBI) Friday announced a sharp 75 basis points rate cut in key policy rates as it looks to revive growth and maintain financial stability.
  • The RBI also allowed all financial institutions, including banks, housing finance companies non-banking finance companies and micro finance institutions, to permit a three-month moratorium for term loans provided to borrowers that were outstanding as of 1 March 2020.
  • The committee also reduced the reverse policy repo rate by 90 basis points to 4 per cent to make it unattractive for banks to passively deposit these funds with RBI and instead lend it to productive sectors of the economy.