Economy: RBI slashes reverse repo rate by 25 bps, no change in repo rate
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Reserve Bank of India (RBI) on Friday cut reverse repo rate by 25 basis points to 3.75 per cent while keeping the repo rate unchanged to provide more relief to an economy reeling under the impact of a lockdown.
Addressing the media for the first time after Prime Minister Narendra Modi extended the lockdown till May 3, RBI Governor Shaktikanta Das said, "Under liquidity adjustment facility (LAF), reverse repo rate (the rate at which RBI borrows funds from banks) reduced by 25 basis points (bps) to 3.75 per cent; repo rate -- the rate at which RBI lends money to banks -- unchanged (4.40 pc) as the decision is taken by the MPC (Monetary Policy Committee).' He further said 90-day NPA (Non-Performing Asset) norm will not be applicable to moratorium granted on existing loans by banks.
The RBI Governor said the LCR (Liquidity Coverage Ratio) requirement of banks has been brought down to 80 per cent from 100 per cent to be restored in phases by April next year. Banks not to make any further dividend payout in view of financial difficulties arising from COVID-19, he said.
This comes just a day after Prime Minister Narendra Modi met Union Finance Minister Nirmala Sitharaman to discuss contours of a proposed stimulus package to kick-start India's stalled economy.
