In a third press meet since the coronavirus-actuated lockdown started on March 25, Reserve Bank of India (RBI) Governor Shaktikanta Das today cut the repo rate by 40 basis points to 4%. This brought the repo rate down from 4.4% to 4%.
The RBI governor cut its repo rate by 75 basis points last month and it has now been reduced by another 40 basis points. 100 basis points equals 1 percent. With the reduction of the RBI repo rate, the debt burden for the common man will be greatly reduced. On the other hand, the RBI reduced the reverse repo rate to 3.35%.
Das furthermore declared a three-month moratorium to be offered by banks to give alleviation to borrowers whose pay has been suffered because of the lockdown. The loan moratorium has now been extended till August 31 for a period of six months.
Finance Minister Nirmala Sitharaman, who as of late reported the ₹20 lakh crore economy package in five tranches, will likewise hold an audit meeting with CEOs of public sector banks (PSBs) today to talk about different issues, including loan disbursement, as a major aspect of endeavors to restore economy reeling under the COVID-19 effect.
This is the seventh consecutive year that the Reserve Bank of India has lowered the repo rate. Incorporating a total of seven times, the basis points reduced to 250. That is, if interest is reduced by 2.50%. Now the Interest rates will also come down as the RBI repo rate is lowered. The home loan and vehicle loan burden will be greatly lowered. New home planners, car buyers and business loan borrowers are likely to attract new interest rates hence forth.