In view of the threat to the economy from the Corona virus, the Reserve Bank has made a historic cut in interest rates. At the same time, the central bank has also imposed a 3-month moratorium on the EMI of the loan. With this, if your loan is running, then you have got the option to postpone EMI for 3 months. This will provide a big relief to small businessmen and middle class. Before the RBI press conference, it was believed that EMI could get a few months of gambling.
The Reserve Bank has also decided to postpone the payment of EMIs of already running loans for 3 months. This decision will be effective on loans taken from all commercial, rural, and cooperative banks. At the same time, EMI will also get 3 months’ relief on a home loan taken from a housing finance company. However, it is an option to postpone EMI for only 3 months. It is not that 3 installments will be given less than your EMI.
The Reserve Bank has cut interest rates by 75 basis points. After this cut, now the repo rate has come down to 4.4 percent. RBI Governor Shaktikanta Das said that the Monetary Policy Committee held a review meeting ahead of time in view of the threat to the economy due to the corona virus. In the meeting, 4 members were in favor of big cuts. Earlier on 4 October 2019, the RBI had cut the interest rates by 25 basis points and then the repo rate was reduced to 5.15 percent. Between February and October 2019, the rates were cut by 135 basis points in 5 consecutive times.
Salient Features of Monetary Policy
- The Reserve Bank has also decided to postpone the payment of EMIs of already running loans for 3 months.
- 75 bps reduction in repo rate, now it has reduced to 4.4 percent.
- 90 bps reduction in reverse repo rate, now it has come down to 4 percent.
- Reduction of 100 bps in Cash Reserve Ratio (CRR), it has come down to 3 percent.
- 100 bps reduction in CRR, will bring Rs 1.37 lakh crore to the market.