The Indian Wire » Business » RBI Governor Press Briefing : Repo Rate reduced to 4%; check major highlights

RBI Governor Press Briefing : Repo Rate reduced to 4%; check major highlights

RBI Governor Shaktikanta Das

The Governor of Reserve Bank of India (RBI), Shaktikanta Das, announced on Friday at a Monetary Policy Committee in a press conference that the regulation would reduce the repo rate by 40 basic point (bps) from 4.4% to 4%. He also said five of six Monetary Policy Committee (MPC) members voted in favour of the rate cut.

Few important key points in the announcement by Shaktikanta Das are as follows-

  1. This comes on top of the INR 9.42trn of liquidity provisioning since the February MPCAmong the steps announced today, the following measures stand out: Steps announced by RBI to improve rate cut transmission, and provide regulatory support to banks, corporates and trade entities.
  2. RBI has allowed banks to extend the debt moratorium by another 3 months, and has given relaxations to banks to increase group exposure limits for corporates (from 25% to 30%), along with permission to convert interest costs accumulated during the moratorium into an extended loan to be repaid within the financial year, along with other steps to augment working capital availability.
  3. To support exports/imports, RBI has increased pre- and post-shipment credit facility, along with a INR150bn credit line extension to EXIM Bank.
  4. For state financing, RBI has allowed measures to relax access for states to the consolidated fund, which should help in relieving stress in state financing.
  5. To support capital flows, RBI noted that FPIs under the Voluntary Retention scheme can take an extra three months to meet their investment commitments.

This is the by far the third briefing by the RBI governor, in last two months, in context to the current COVID-19 pandemic situation.

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