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.