RBI governor Shaktikanta Das on Friday 27th March 2020 announced a cut on repo rate by 75 basis points. He said this is often a unprecedented condition and these steps are taken in sight of the Covid-19 pandemic to preserve the economic stability & to spice up liquidity during a stimulus worth 3.2% of GDP.

HIGHLIGHTS: WHAT RBI Governor Announced

• Cut in repo rate by 75 basis points, which is bringing it from 5.15% to 4.4%, which is that the lowest ever.
• Reverse repo rate reduced by 90 basis points, bringing it to 4%.
• The biggest one: Lending institutions can allow a three-month moratorium on EMI payments. this suggests now debtors are legally authorized to postpone their EMI payment for 3 months.
• Deferment on loan and interest repayments won’t be considered as defaulting and hence won’t impact the borrower’s CIBIL.
• Liquidity worth 3.74 lakh crore to be injected by RMI into the system.
• The RBI governor assured depositors that their money is safe privately banks, and therefore the public shouldn’t start panic withdrawals.
• Mr. Das added also said that the bank stocks crash shouldn’t be a matter of worry for the depositors.
• The Cash Reserve Ratio (CRR) of all banks has been reduced by 100 basis points which are 3%.

Impact of the rate cut on borrowers:

• This unexpected rate cut is within the great favor of the borrowers. because the RBI said of these steps are taken to counter the economic impact of the coronavirus pandemic.
• The rate cut announced by the RBI governor is that the lowest ever.
• This will likely reduce the EMI for your ongoing loans.
• Opting for a replacement loan will become cheaper.
• The bank is probably going to supply more loans.

All these cuts on rates are in view of the Covid-19 crisis and in order to mitigate its impact on the economy.

On 26th March our honorable minister of finance has also made several announcements to fight the Covid-19 pandemic. the main announcements made by her included-

• ₹1.7 lakh crore relief package for the poor.
• ₹50, 00,000 insurance protect the soldiers you’re fighting with this pandemic on the front. (for Doctors, nurses, Asha, Pharmacists, etc.)
• Ujjwala beneficiaries get free LPG cylinders for 3 months.
• EPFO to permit 75% non-refundable advance or 3 months of salary whichever is lower.
• Government to pay EPF contribution, for both the employer and employee for subsequent 3 months for all those companies with but 100 employees where 90% earn but ₹15,000 per month.