RBI extends loan moratorium for another 3 months | Fusion - WeRIndia

Reserve Bank of India (RBI) Governor Shaktikanta Das yesterday announced several financial measures while addressing the media.

This is his third address since the commencement of the first phase of lockdown in the country on March 25.

RBI slashed the repo rate by 40 basis points to 4 per cent and cut the reverse repo rate to 3.35 per cent.

Here are the highlights of the speech of RBI Governor:

• RBI extended the moratorium period on all term loans for another 3 months till August 31, 2020.
• It extended ₹15,000 crore line of credit to EXIM Bank.
• The export credit period has been increased to 15 months from 1 year.
• The group exposure limit for lenders to corporates has been raised to 30 per cent from 25 per cent.
• Foreign exchange reserves have increased by 9.2 billion during 2020-21. The reserves were $487 billion by 15th May.
• Demand in various sectors and products including petroleum, electricity and consumption has been fallen in the country.
• The revenues of the government have also been affected due to COVID-19 outbreak.
• RBI is taking several proactive measures.
• GDP growth is likely to remain in a negative category.
• Inflation will remain strong in the first half of the year 2020-21.
• The monetary policy committee (MPC) believes that the inflation outlook is uncertain at this moment.
• However, the inflation may be eased in the second half of the year due to favourable effects.

As soon as the RBI announced the cut in the policy rate, the Sensex was down. Especially banking shares and financial stocks underperformed.

However, the reduced repo rate and the extended moratorium period for additional 3 months is expected to benefit the real estate sector.

Image Credit: Press Information Bureau, Government of India / CC BY 3.0

Image Reference: https://commons.wikimedia.org/wiki/File:Shaktikanta_Das,_IAS.jpg