Key Highlights of RBI Gov. Shaktikanta Das' Announcements on Repo Rate Cut

Today RBI Governor, Shaktikanta Das announced that the repo rate is reduced by 40 bps. Repo rate cut by 40 bps to 4 per cent from 4.4 per cent earlier. Reverse repo rate cut by 40 bps to 3.35 per cent. he also informed that RBI maintains accommodative stance till growth revives.

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SMEStreet Desk
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Shaktikanta Das, RBI, Repo Rate

Notably, this will be the third presser by Shaktikanta Das, Governor RBI in the context of coronavirus-related measures in the last two months. The first one was held on March 27 and the second one was on April 17. In these two pressers, the RBI governor had announced several measures to ease liquidity pressure in the banking system and to boost the economy from the coronavirus shock.

Highlights of the briefing:

  • MPC voted for a reduction in rates. It was decided to reduce repo rate by 40 bps.
  • Repo rate cut by 40 bps to 4 per cent from 4.4 per cent earlier.
  • Reverse repo rate cut by 40 bps to 3.35 per cent.
  • Moratorium on loan repayments extended by an additional 3 months from June 1 to August 31.
  • The group exposure limit for lenders to corporates raised to 30 per cent from 25 per cent.
  • RBI to extend Rs 15,000 crore line of credit to EXIM Bank.
  • RBI has decided to roll over the facility of Rs 15,000 crore for another 90 days in SIDBI.
  • RBI maintains an accommodative stance till growth revives.
  • The domestic market hit due to the lockdown.
  • Electricity and petroleum have seen a plunge in demand.
  • Kharif sowing was up by 45 per cent compared to the last season.
  • Food inflation has surged to 8. 6 per cent.
  • Inflation outlook highly uncertain; the elevated level of inflation in pulses worrisome, requires a review of import duties.
  • India’s merchandise exports and imports suffered their worst slump in 30 years.
  • MPC is of the view that headline inflation will remain firm in the first half of 2020. But there will be an ease in the second half of 2020.
  • MPC is of the view that the macroeconomic impact of the pandemic is more severe than initially anticipated

Shaktikanta Das further mentioned, "RBI’s job is to maintain the banking system in sound condition. It is doing all it should in this direction."

RBI Repo rate Shaktikanta Das