National

No EMIs on Loans For 3 Months, RBI Relief For COVID-19 Hit India

MUMBAI: Reserve Bank of India (RBI) Governor Shaktikanta Das announced a massive 75 basis points cut in repo rates, as a measure to counter the economic slowdown caused by the COVID-19 pandemic on Friday. He also announced a 3-month moratorium on all outstanding loans. This came just a day after the Finance Minister Nirmala Sitharaman announced a Rs 1.7 lakh crore stimulus that included free food grains and cooking gas for the poor for three months to battle the impact of coronavirus.

Accordingly, the Monetary Policy Committee of the central bank in an unscheduled meet reduced the repo rate, the key interest rate at which the RBI lends short term funds to commercial banks, by 75 basis points to 4.40 per cent from 5.15 per cent. Consequently, the reverse repo rate was also reduced by 90 basis points to 4 per cent. Besides, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.65 per cent from 5.40 per cent. “The purpose of this measure relating to reverse repo, is to make it relatively unattractive for banks to passively deposit funds with the Reserve Bank, and instead to use these funds for lending to the productive sectors of the economy,” RBI Governor Shaktikanta Das said. “The time has now come for the Reserve Bank to unleash an array of instruments from its arsenal to mitigate the impact of Covid-19 and, above all, preserve financial stability,” he said.

3-months moratorium of EMIs on all outstanding loans
Shaktikanta Das also announced a moratorium of three months of EMIs on all outstanding loans.

The statement says: “All commercial, regional, rural, NBFCs and small finance banks are being permitted to allow 3-month moratorium on payment of instalments in respect of all term loan EMIs outstanding on March 31.”

For the next three months, no EMI would be deducted from the account of anyone who has a loan outstanding. In addition, this will not affect the CIBIL credit scores, he said. EMIs will resume after the moratorium period gets over.

This is going to be a huge relief for all EMI payers, especially for those employed and whose income had become uncertain in the wake of the lockdown.

The 3-month moratorium applies to all term loans- corporate loans, home loans, personal and car loans.

Credit card dues will not be part of this moratorium as it’s not a term loan.

Make no mistake, it is a fight never seen before, the RBI governor warned while outlining the risks to Indian economy from coronavirus. He stressed upon the need to keep the credit flowing to the stressed areas of the economy. (With inputs from PTI and The Economic Times)

Tags

Related Articles

Back to top button
error: Content is protected by G News !!
Close