PM Modi calls RBI measures ‘giant steps’ for economy, FM calls for ‘quick transmission’ of cut rates
The prime minister said the initiatives will ‘improve liquidity, reduce cost of funds, help middle class and businesses’.
Prime Minister Narendra Modi on Friday said that the Reserve Bank of India had taken “giant steps” to ensure that the Indian economy was safeguarded from the effect of coronavirus.
The prime minister’s remarks followed a slew of the central bank’s announcements, including the repo rate, or the interest rate at which the top bank lends to commercial banks, being reduced by 75 basis points to 4.4%. RBI Governor Shaktikanta Das said the reverse repo rate was also cut by 90 basis points to 4%. The reverse repo rate is the rate at which the central bank borrows money from commercial banks.
“The announcements will improve liquidity, reduce cost of funds, help middle class and businesses,” the prime minister tweeted.
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In its announcements, RBI said all commercial banks and non-banking financial corporations will be allowed a three-month moratorium on payment of installments of all term loans. The central bank also decided to cut the Cash Reserve Ratio of all banks by 100 basis points. Cash Reserve Ratio is the amount of cash commercial banks have to mandatorily deposit with the Reserve Bank of India.
Several other politicians also reacted to the RBI’s measures to ease the economic impact of the coronavirus. Finance Minister Nirmala Sitharaman tweeted: “Appreciate RBI Governor Shaktikanta Das’s reassuring words on financial stability. The three month moratorium on payments of term loan instalments and interest on working capital give much-desired relief. Slashed interest rate needs quick transmission.”
Union minster Prakash Javadekar said the central bank’s declarations will reduce the burden of interest on businesses and industries, and will trigger economic activities. “Narendra Modi government’s historical decisions in succession,” Javadekar tweeted. “Three months’ moratorium on repayment of EMI will help all homebuyers, vehicle buyers and other customers.”
Union Minister of Food Processing Harsimrat Kaur Badal said thanked Modi’s administration, Sitharaman, and RBI for the announcements. “The three month moratorium on term loans of all banks and NBFCs is a welcome step and is being greeted as such by middle class which is stressed due to coronavirus lockdown.
Bharatiya Janata Party chief Jagat Prakash Nadda also hailed the initiatives. “Our government is taking all necessary actions to help the citizens in this difficult time,” he tweeted. “Yesterday, government announced relief package. Today, in another important step RBI has taken many important decisions to give support and stability to Indian economy.”