RBI offers relief to borrowers
Offering much needed respite to borrowers, whose income has been severely affected by covid-19, the Reserve Bank of India (RBI) Governor Shaktikanta Das cut the repo rate by 40 basis points from 4.4% to 4%. He also extended moratorium on all term loans by another 3 months until 31st August’20. Meanwhile, the reverse repo rate was reduced to 3.35%.
“Even though the lockdown may be lifted by end-May with some restrictions, economic activity even in Q2 may remain subdued due to social distancing measures and the temporary shortage of labour. Recovery in economic activity is expected to begin in Q3 and gain momentum in Q4 as supply lines are gradually restored to normalcy and demand gradually revives,” Das observed.
The bank also extended export credit period from 1 year to 15 months and offered an extension of Rs 15,000 crore line of credit to EXIM Bank. Credit facility for SIDBI was also rolled over for next 90 days, while the rules governing withdrawal from Consolidated Sinking Fund (CSF) were relaxed. Group Exposure Limit for lenders to corporates raised to 30% from 25%