Shaktikanta Das, the Governor of the Reserve Bank of India (RBI,) conducted a press meet, describing the Bank’s policies and other changes during the Novel Coronavirus crisis.
Mr. Das said the banking system of India is safe and sound. He said, “In recent past COVID-19 related volatility in the stock market has impacted share prices of banks as well resulting in some panic withdrawal of deposits from a few private sector banks.”
To help the citizens of India, the RBI decided to cut the repo rate by 75 basis points to 4.4 %) and the reverse repo rate to be reduced by 90 basis points to 4 % . The repo rate is the interest rate at which the central bank lends money to the commercial banks, while the reverse repo rate is the rate at which the RBI borrows money from the banks. The reason behind this move is to make it less of an incentive for banks to hoard money– making liquidity in the economy easier. .The decision to revise and reduce the repo rate was taken during the COVID-19 crisis to revive growth.
The RBI also suggested to allow a 3 months moratorium on all loans. Mr. Das said all the companies and banks are allowed to defer their loans and do repayments by 3 months in the wake of the Coronavirus crisis.
These decisions would help to maintain liquidity in the banking system in India amid the crises.
Meanwhile, amid the lockdown, the figures of COVID-19 cases are increasing day by day. In less than 24 hours, the COVID-19 cases jumped to 724 from 649, whereas the casualties rose to 17 from 13.
Stay tuned for further updates about COVID-19.