You May Not Have to Pay EMIs for Next 3 Months on All Term Loans as RBI Announces Moratorium

The Reserve Bank of India (RBI) on Friday went all guns blazing to arrest a potential slowdown caused by the coronavirus (Covid-19), lowering the policy repo rate by 75 basis points to 4.4 per cent.

"Given the Covid-19 stress, the six-member monetary policy committee (MPC) advanced their March 31-April 3 meetings to meet on March 24-26 and 27, and voted 4:2 to cut the policy repo rate to 4.4 per cent", Reserve Bank of India Governor Shaktikanta Das, who addressed the media through video streaming, said.

At the same time, the reverse repo rate, which is the rate at which banks keep their excess funds with the RBI, was lowered by 90 basis points to discourage banks from keeping their excess liquidity with the central bank. The idea is that banks must lend funds for productive needs.