RBI unleashes more firepower; cuts lending rates; extends moratorium

MUMBAI: To mitigate the impact of COVID-19 induced economic fallout, the Reserve Bank of India on Friday further reduced key lending rates by 40 basis points to historic low levels.

Making the announcement through an online address, RBI Governor Shaktikanta Das said the Monetary Policy Committee of the central bank in an unscheduled meet has reduced the key - repo - rate to 4 per cent from 4.40 per cent.

Consequently, the reverse repo rate has automatically been reduced to 3.35 per cent 3.75 per cent.

Besides, the Apex bank took other major decisions keeping in mind the devastating economic impact of COVID-19 pandemic.

In one such decision, the Reserve Bank extended the moratorium on interest payments on all term loans for another three months.

It also allowed for repayment of accumulated interest on account of the moratorium through FY21.

Furthermore, Governor Das noted that pandemic has had a crushing blow to the demand.

"High frequency indicators points to collapse in demand in March, the Governor said.

Das observed that investment demand has virtually been halted. He, however, said that agriculture.

He added the MPC will maintain accommodative stance, therefore, leaving further for more policy action.