Reserve Bank of India Governor Shaktikanta Das while addressing the media has announced a reduction in the repo and reverse repo rate .
This decision comes a day after Union Finance Minister Nirmala Sitharaman announced a special Rs 1.7 lakh crore relief package to help the poor and migrant workers amid a 21-day nationwide lockdown to mitigate the impact of coronavirus pandemic.
“The repo rate has been reduced by 75 basis points to 4.4 per cent. The reserve repo rate has been reduced by 90 basis points to 4 per cent,” Das said .
The decision for “a sizeable reduction” in the policy repo rate, according to the RBI governor, was taken to “revive growth and mitigate the impact of covid-19 and ensure financial stability.”
“India has locked down economic activity and financial markets are under severe stress. Finance is the lifeline of the economy, keeping it following is the paramount objective of the Reserve Bank of India at this point of time”, Das said
The cash reserve ratio of all banks reduced by 100 bps to 3 pc with effect from March 28 for 1 yr. This measure will release Rs 1.37 lakh cr liquidity into the system, Das said.
Das further stated that the banking system in India is safe; deposits are safe in private bank; public should not resort to panic withdrawal. Macroeconomic fundamental stronger than those in aftermath of 2008 financial market crisis .