With the RBI giving a green signal to defer loan repayment for three months, the ball is in the banks’ court to pass on the benefit to people, many of whom have been affected to due job loss and salary cuts in wake of COVID-19 crisis
New Delhi, March 27:
In a move aimed at mitigating the impact of the coronavirus outbreak on businesses and employees in India, the Reserve Bank of India on Friday asked all banks and other lending institutions to allow a three-month moratorium on all kinds of loans. The RBI also said that moratorium on term loans and deferment of interest payment would not result in asset classification downgrade.
With the RBI giving a green signal to defer loan repayment for three months, the ball is in the banks’ court to pass on the benefit to people, many of whom have been affected to due job loss and salary cuts in wake of COVID-19 crisis.
The apex bank also said all lending institutions and banks had been allowed to defer interest on working capital repayments by three months. The RBI also allowed banks to reassess the working capital cycle and said that they won’t be treated as non-performing assets.
Shaktikanta Das, in context of the recent YES Bank crisis, said the Indian Banking system was “safe and sound”. He said bank depositors of commercial banks, including private ones, should not worry about the safety of their money. “Do not resort to the panic withdrawal of deposits from private banks, your money is safe,” he added.
RBI’s Monetary Policy Committee, in its meeting held between March 24-27, decided to cut repo rate by 75 basis points to 4.4 per cent, while the reverse repo rate has been reduced by 90 basis points. Calling the current times “extraordinary circumstances”, the RBI Governor said the MPC voted for a sizeable reduction in repo rate to revive growth, mitigate COVID-19 impact.
The decision comes a day after the government announced Rs 1.7 lakh crore worth relief package for poor people, employees and women to cope with the COVID-19 crisis. In her second address to the media within a week, Sitharaman announced Rs 50 lakh medical insurance cover per person for healthcare workers, sanitation workers, paramedics, doctors and nurses who are exposing themselves to the virus.
The current decisions taken by the RBI would provide a big relief to the individuals, businesses facing a big economic challenge in the wake of the 21-day lockdown announced by the government.
Courtesy: Business Today
