RBI Slashes Repo Rate To Record Low Of 4%

Extends moratorium on loans too by three months to cushion virus blow

The RBI in an emergency meeting on Friday slashed its key policy rate to a record low as part of its efforts to counter the devastating economic fallout of the two-month-long lockdown to fight the spread of the dreaded coronavirus pandemic.

The apex bank also extended the moratorium on loans to a total of six months to ease the financial stress on individuals and corporate borrowers after RBI governor Shaktikanta Das said the economy was expected to contract in the 2020-21 financial year.

The RBI cut the repo rate, at which it gives short term loans to banks, by 0.4% to the lowest on record at 4%. Consequently, the reverse repo rate at which the central bank picks up funds from banks was also reduced by 0.4% to 3.35.% The RBI has now cut the repo rate by a total of 1.15% since the lockdown began on March 25.