Coronavirus In India: RBI Cuts Repo Rate By 75 BPS To 4.4 %, Slashes CRR By 100 BPS; Key Points

To deal with the hardship caused due to the outbreak of COVID-19, the RBI Governor Shaktikanta Das made a number of crucial announcements, in his address to the media.

Governor of the Reserve Bank of India (RBI) Shaktikanta Das speaks during a press conference. (PARANJPE / AFP)

New Delhi: Taking a major step aimed at mitigating the probable impact of the coronavirus Covid-19 pandemic on the economy of the country, the Reserve Bank of India (RBI) on Friday cut benchmark interest rate by 75 basis points to 4.4 per cent. The central bank also reduced the cash reserve ratio (CRR) of all banks by 100 basis points to 3 per cent with effect from March 28 for 1 year. To deal with the hardship caused due to the outbreak of COVID-19, the RBI Governor Shaktikanta Das made a number of crucial announcements, in his address to the media at 10 am on Friday, which is the third day of the countrywide lockdown  Here are the major takeaways from his address.

• Repo rate reduced by 75 basis points to 4.4.%. Reverse repo-rate reduced by 90 basis points to 4%
• MPC (Monetary Policy Committee) noted that global economic activity has come to a near stand-still as COVID19 related lockdowns and social distancing in affected countries. Expectations of a shallow recovery in 2020 from 2019's decade low in global growth have been dashed.
• The outlook is now heavily contingent upon the intensity, spread & duration of the pandemic. There is a rising probability that large parts of the world will slip into recession.
• Covid-19 stocks the global economy and the outlook is highly uncertain & negative. Several nations are battling its exponential contagion. Countries are shutting down to prevent being sucked into a kind of black hole.
• India has locked down economic activity and financial markets are under severe stress. Finance is the lifeline of the economy, keeping it following is the paramount objective of the Reserve Bank of India at this point of time
• It has been decided to reduce the Cash Reserve Ratio (CRR) of all banks by 100 basis points to 3% of Net Demand and Time Liabilities with effect from the fortnight beginning March 28 for a period of 1 year.
• Indian banking system is safe and sound. In recent past COVID19 related volatility in stock market has impacted share prices of banks as well resulting in some panic withdrawal of deposits from a few private sector banks
• It would be fallacious to link share prices to the safety of deposits. Depositors of commercial banks including private sector banks need not worry on the safety of their funds.

  (with inputs from ANI)