RBI Cuts Rates, Allows Loan Moratorium

To ease impact of lockdown, repo and reverse repo rates reduced; EMIs deferred for three months

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The Reserve Bank of India (RBI) has opened up the liquidity floodgates for banks even as it reduced the key interest rate sharply by 75 bps and allowed equated monthly instalments (EMIs) to be deferred by three months in a move to fight the economic impact of the countrywide lockdown to check the spread of novel coronavirus.

The repo rate was reduced to by 75 bps 4.4% while the reverse repo rate was cut by 90 bps point to 4%. The higher reduction in the reverse repo rate was aimed at prompting banks to lend more rather than keeping their excess liquidity with the RBI.

Unprecedented crisis