Prime Minister Narendra Modi on Friday said the Reserve Bank of India (RBI) had taken giant steps to safeguard the economy from the impact of the coronavirus. The RBI cut the benchmark interest rate by 75 basis points to 4.4 per cent on Friday to deal with the hardship caused due to the outbreak of COVID-19. "The announcements will improve liquidity, reduce cost of funds, help middle class and businesses," Modi said.
"Today RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses," PM Modi tweeted hours after RBI Governor Shaktikanta Das's announcement on Friday morning.
RBI governor announced a massive 75 basis points cut in repo rate and further 90 basis points cut in reverse repo rate (which sets the floor of the liquidity adjustment facility (LAF) corridor). Repo rate is the key interest rate at which the RBI lends short-term funds to commercial banks.
Shaktikanta Das also announced a 100 bps cut in cash reserver ratio (CRR) to bring more liquidity in the system. To ease the pressure on people who were staring at loan defaults, RBI asked banks to announce a 3-month pause on all EMIs.
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