RBI Highlights: Shaktikanta Das allows to pause loan EMIs for 3 months; announces 75 bps emergency repo rate cut

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Updated:Mar 27, 2020 6:29:05 pm

RBI Highlights: Shaktikanta Das announced a cut in repo rate by 75 basis points; allowed banks and financial institutions to put a moratorium on term loans.

RBI, Shaktikanta Das, RBI Governor Shaktikanta Das, Coronavirus, economy, indian economy, world economy, economic growth, india, interest ratesRBI Highlights: The central bank has been trying to infuse liquidity into the markets in the past few days with repo operations.

RBI Highlights: Shaktikanta Das has announced 75 basis points cut in repo rate, effectively taking the repo rate to 4.4% from the earlier 5.15%. Along with this, RBI has allowed banks and financial institutions to put a moratorium on term loans. Shaktikanta Das added that the MPC refrained from projecting inflation and growth this time as the situation was too volatile. The RBI has also announced a comprehensive package, including measures to expand liquidity, steps to reinforce monetary transmission, efforts to ease financial stress by relaxing repayment and endeavour to improve the functioning of the market. “The world is fighting an invisible assassin,” Das said while he announced a slew of measures, including measures to infuse liquidity and a 3-month moratorium on term loans. The RBI Governor has clarified that the non-payment of EMIs during the moratorium period will not result in asset classification downgrade. Heightened volatility, unprecedented uncertainty and extremely fluid state of affairs, projections of growth and inflation would be heavily contingent on the intensity, spread, and duration of COVID-19, Reserve Bank added. 

Watch: What is RBI Repo Rate? Key monetary policy bank interest rate cut, increase explained

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Highlights

    17:21 (IST)27 Mar 2020
    RBI is making sure that there is enough liquidity in market once lockdown is lifted

    The RBI policy is making sure that there is enough liquidity in the market once the lockdown is lifted by way of reducing the reverse repo rate by 90 basis points. This will pump in cash required into the system and make the fund available for the MSMEs and helps the economy to be on track. - CMA B Mallikarjuna Gupta, Chief Taxologist, Logo Infosoft.

    16:24 (IST)27 Mar 2020
    Government is not leaving any stone unturned to fight coronavirus

    Today's RBI measures will boost sentiments of a common Indian and also signals are very strong that the government is not leaving any stone unturned to fight this epidemic on the financial front. - Vikas Jain, CEO of Labdhi Lifestyle

    16:21 (IST)27 Mar 2020
    Slide in share market should be seen as profit booking and not a negative reaction

    Full marks to the RBI Governor for these commendable and decisive steps. While the stock market erased its gains post the policy announcement, I would imagine that expectations were already built-in, over the past 3 days; and I would view the slide as profit booking and not a negative reaction to the measures announced. - Amar Ambani, Senior President and Head of Research, YES Securities

    15:15 (IST)27 Mar 2020
    Realty sector may continue to face a lean period

    The realty sector might continue to face a lean period as people will wait before coming out and look for properties to buy/invest. However, other businesses and the working class would majorly benefit from these initiatives and be able to get the economy back in shape once this pandemic is behind us. - Hakim Lakdawala, Group Promoter, Goodwill Developers.

    15:05 (IST)27 Mar 2020
    Large increase in liquidity, substantially through monetisation, can pose a potential threat to economic stability in medium-term

    The large increase in liquidity, substantially through monetisation, can pose a potential threat to economic stability in the medium term unless the capacity utilisation expands fast when the normalcy returns. - M Govinda Rao, Chief Economic Advisor, Brickwork Ratings

    15:04 (IST)27 Mar 2020
    One needs to be very careful about how the situation unfolds

    Announcements and measures are timely but one needs to be very careful about how the situation unfolds in the coming days. Regulatory forbearance has to be temporary and must be closely monitored to prevent an increase in NPAs. - M Govinda Rao, Chief Economic Advisor, Brickwork Ratings

    15:01 (IST)27 Mar 2020
    New home loan customers and projects won’t be able to get profit

    While existing home loan customers will definitely benefit and the rate cut will come as a sigh of relief as banks pass on the benefits, new customers and projects won’t be able to profit due to the uncertainty and surrounding lockdown. We expect relief to the industry if Banks and NBFC's choose to pass on the benefits in entirety or partly to the end consumers. - Rahul Grover-CEO, SECCPL

    14:57 (IST)27 Mar 2020
    RBI's measures not only saves urban middle class, industrial borrowers at large but also help banks

    RBI's measures does not only save the urban middle class, industrial borrowers at large but also help the banks (scheduled and cooperative) and NBFCs which are already dealing with the stress of rising NPAs. And that, in turn, would reflect into their stock prices too. In short, it’s a win-win situation for all. - Gurpreet Sidana, Chief Operating Officer, Religare Broking

    14:47 (IST)27 Mar 2020
    RBI's measures to support credit growth and revive the downturn in the economy

    The current outbreak of coronavirus which has triggered lockdown across the entire nation has led to market expectations of further cut in repo rates. These could in-turn support credit growth and revive the downturn in the economy contingent upon transmission in policy rate cut by scheduled commercial banks and demand for bank loans by various industries. - Care Ratings

    14:43 (IST)27 Mar 2020
    Slow transmission still a roadblock

    There has been a cumulative repo rate cut of 110 bps in FY20 but the lending rates of scheduled commercial bankshave fallen by a lower quantum. Since, February’19, the repo rate cut has aggregated 135 bps. -  Care Ratings

    14:28 (IST)27 Mar 2020
    RBI's relaxation of only 3 months instead of 6 months for a moratorium has disappointed

    In such uncertain times instead of fresh funds entities want to save their skin, RBI's relaxation of only 3 months instead of 6 months for a moratorium on interest on loans and working capital has disappointed many. No doubt, RBI is playing every card in its pocket to prevent a crisis like situation by giving banks the ability to lend more but as such no direct helping hand has been given to ailing industries as of now. - Jimeet Modi, Founder & CEO, Samco Securities

    14:22 (IST)27 Mar 2020
    RBI's measures to act as economic troubleshooter, salvaging Indian economic slump amidst world recession

    In the crucial time where the Indian economy is battling the exponential contagion, fresh liquidity pumped in the system will certainly help to mitigate the stressed cash flow and debt pressure in the economic system. The RBI has rightly packaged the relief measures by amplifying all the best instruments to act as an economic troubleshooter, salvaging Indian economic slump amidst world recession. - Niranjan Hiranandani, President- Assocham and NAREDCO

    14:15 (IST)27 Mar 2020
    Important to immediately transmit rate cuts to the homebuyers

    It is important for immediate transmission of these rate cuts to the home buyer which will boost consumer sentiment. The state governments should also take necessary steps to utilise the cumulative INR 31,000 crore funds for the welfare of building & construction labourers to help those who are severely impacted by the economic disruption on the back of the lockdown.- Ramesh Nair, CEO & Country Head of JLL India

    14:10 (IST)27 Mar 2020
    RBI's announcement shows stability of Indian economy and financial sector

    The central bank’s willingness to use all the instruments at its disposal to mitigate the impact of a global pandemic on the functioning and the stability of the Indian economy and the financial sector. - Ramesh Nair, CEO & Country Head of JLL India

    14:04 (IST)27 Mar 2020
    Today's RBI measures to address liquidity challenges faced by NBFCs and banks

    Fiscal measures such as the deferring working capital interest, reduction of CRR for all banks by 100 basis points, amongst other measures, should address liquidity challenges faced by NBFCs and banks. The decision to defer installments of all term loans by three months will provide the necessary support to homebuyers as well. -Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa.

    13:59 (IST)27 Mar 2020
    RBI's measures will ease the recent near freeze in the credit markets

    We expect yields to lower significantly across the curve (more in the short to medium tenor) and contraction in spreads. The measures will ease the recent near freeze in the credit markets. - Suvodeep Rakshit, Vice President & Sr. Economist, Kotak Institutional Equities

    13:54 (IST)27 Mar 2020
    While adverse implications of demand, supply contraction on real economy remain, RBI’s decisions will help in easing any resultant financial dislocations

    The measures also ease the financial burdens of the sector at risk(such as transport, hotel, restaurants, MSMEs, tourism, textiles, etc. as well as retail borrowers) from the Covid-19 impact. While the adverse implications of demand and supply contraction on the real economy remain, the RBI’s decisions will help in easing any resultant financial dislocations as well as keep the funding channels working. - Suvodeep Rakshit, Vice President & Sr. Economist, Kotak Institutional Equities

    13:49 (IST)27 Mar 2020
    RBI will reduce the interest burden on businesses and industries - Prakash Javadekar

    Steps announced by RBI will reduce the interest burden on businesses/industries and will boost economic activities. - Cabinet Minister Prakash Javadekar

    13:48 (IST)27 Mar 2020
    Prime Minister Narendra Modi has appreciated RBI's move to roll out comprehensive package

    PM Narendra Modi: RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce the cost of funds, help middle class and businesses.

    13:41 (IST)27 Mar 2020
    Real estate sector as well to benefit from these measures including relief to debtors

    To a great extent, these measures will minimize the hardships of the economy that is reeling under stress due to Covid- 19. We foresee the real estate sector as well to benefit from these measures including relief to debtors and a boost in consumer and investor sentiment in the sector.” - Sandeep Agarwal, CFO, Pioneer Urban Land and Infrastructure Ltd.

    13:39 (IST)27 Mar 2020
    RBI's decision crucial to the functioning of businesses

    RBI's decision will be crucial to the functioning of businesses in the wake of the Covid-19 pandemic. We expect the demand to pick up gradually across sectors including the real estate followed by a revival in consumer sentiment. - Ravish Kapoor, Managing Director, Elan Group

    13:37 (IST)27 Mar 2020
    Revised repo rate : Booster for large segment of business and taxpayers

    The revised repo rate of 4.40% will benefit a large segment of business and taxpayers along with an expected infusion of liquidity to the tune of Rs 2.8 lakh crore via various instruments which will be equal to 1.4 percent of GDP. -  Farshid Cooper, MD, Spenta Corporation

    13:33 (IST)27 Mar 2020
    RBI's measures will elevate sentiments temporarily but the main impact will be visible post the lifting of lockdown

    Financials will get breathing space as far as recovery and NPA recognition is concerned. It could elevate sentiments temporarily but the main impact will be visible post the lifting of lockdown. In the interim softer yields could benefit investors in Gsec/other debt papers (including Banks) to book some MTM gains. - Dhiraj Relli, MD & CEO, HDFC Securities

     

    13:30 (IST)27 Mar 2020
    Impacts of today's measures on economic growth could take some time to fructify

    Overall MPC gave more than what was expected and assured to resort to more measures if the situation worsens. The impact of these measures on economic growth could take some time to fructify. - Dhiraj Relli, MD & CEO, HDFC Securities

    13:28 (IST)27 Mar 2020
    Massive liquidity infusion would ease elevated yields

    Massive liquidity infusion (~3.2% of GDP after pandemic outbreak) via CRR rate cut of 100bps, MSF, especially targeted LTROs for onward lending to corporates would ease the elevated yields. Relief to the borrowers by way of a moratorium on term loans for 3 months, deferment of interest payment on working capital loans is a big positive. - Dhiraj Relli, MD & CEO, HDFC Securities

    13:25 (IST)27 Mar 2020
    India INC applauds Robust Liquidity Infusion Step – Niranjan Hiranandani – President- Assocham and NAREDCO

    In a much-awaited move, RBI has come up with measures to expand liquidity as also ease banking regulations; has cut rates as also announced moratorium of three months of EMIs on all outstanding loans. Stakeholders in the Indian economy will heave a sigh of relief, as these moves reflect measures to take on the economic crisis caused by the COVID-19 pandemic. As the RBI Governor pointed out, these moves will enhance liquidity and ensure smooth functioning of financial institutions, while the EMI moratorium will ensure no impact on credit ratings on loan repayments. The volume of measures carried out by the apex bank to infuse liquidity amounting to Rs 3.75 lakh crores back in the system is robust and applauded to uplift market sentiments. This fiscal relief package in addition to the FM’s Rs 1.7lakh crore relief package ensures that the government is vigilant to retrieve nation out of economic pain and safeguard job loss.

    13:23 (IST)27 Mar 2020
    ICRA lowers base case scenario for GDP growth to -4.5% for Q1 FY2021 and to 2.0% for FY2021

    Regardless of the measures announced now by the RBI, we are lowering our base case scenario for GDP growth to -4.5% for Q1 FY2021 and to 2.0% for FY2021, in light of the rapidly growing uncertainties over the duration of the impact of the coronavirus on economic activity in India and the rest of the world. - Aditi Nayar, Principal Economist, ICRA 

    13:20 (IST)27 Mar 2020
    Sharper-than-hoped-for repo rate cut will help to assuage the markets in these increasingly unsettled times: ICRA

    The combination of moratoriums, liquidity enhancing measures and the sharper-than-hoped-for repo rate cut will help to assuage the markets in these increasingly unsettled times and offer some protection against widespread defaults, even though the actual impact on boosting economic activity may be limited. - Aditi Nayar, Principal Economist, ICRA

    13:14 (IST)27 Mar 2020
    RBI brings out much-needed comprehensive package

    The MPC has come with really big measures including rate cuts, CRR cut, Floating rate long-term repos for investment-grade corporate bonds and CPs, forbearance on loans in terms of moratoriums and deferral of interest payments, capital conservation buffer deferment by 6 months, Offshore NDF market relaxations. This seems to be a comprehensive package and very necessary at this stage when growth will be under pressure. - Sudhakar Shanbhag, Chief Investment Officer, Kotak Mahindra Life Insurance Company Ltd.

    13:11 (IST)27 Mar 2020
    Moratorium on interest & deferment of working capital is much-needed oxygen

    The repo rate, reverse repo rate & CRR cuts will help improve liquidity. The moratorium on interest & deferment of working capital is much-needed oxygen for the gasping industry - FICCI President Sangita Reddy.

    13:08 (IST)27 Mar 2020
    3-month moratorium on all loans from lending institutions also should alleviate near term cash flow concerns for borrowers

    The rate cut was on expected lines and the additional measures to expand liquidity should help stabilize the market and ease the current tight financial conditions. The three-month moratorium on all loans from lending institutions also should alleviate near term cash flow concerns for borrowers. Overall, it is a positive for fixed income investors. - Arun Kumar, Head of Research at FundsIndia.com

    12:55 (IST)27 Mar 2020
    Today's measures should help in tiding through the end of the year issues which many banks or financial institutions were fearing

    RBI, very correctly so, announced a comprehensive bazooka covering all aspects of the economy by taking measures system-wide both through liquidity, rates and regulatory forbearance (retail as well as for industry) and also targeted measures to manage the corporate bond markets. The measures should help in tiding through the end of the year issues which many banks/institutions were fearing and will go a long way in cushioning the dislocations in various markets. We expect additional scope for 40-50bps of rate cut with any further easing and extension of measures depending on the nature of the spread of COVID-19. - Upasna Bhardwaj, Sr. Economist, Kotak Mahindra Bank.

    12:47 (IST)27 Mar 2020
    Measures will go a long way in cushioning the dislocations in various markets: Upasna Bhardwaj, Sr. Economist, Kotak Mahindra Bank

    RBI, very correctly so, announced a comprehensive bazooka covering all aspects of the economy by taking measures system-wide both through liquidity, rates and regulatory forbearance (retail as well as for industry) and also targeted measures to manage the corporate bond markets. The measures should help in tiding through the end of the year issues which many banks/institutions were fearing and will go a long way in cushioning the dislocations in various markets. We expect additional scope for 40-50bps of rate cut with any further easing and extension of measures depending on the nature of spread of COVID-19.

    12:44 (IST)27 Mar 2020
    Relief given on the repayments in term loans is indeed a very timely action

    The relief given on the repayments in term loans is indeed a very timely action and would serve to remove a lot of stress which a large number of borrowers may face in the coming days. This is a direct and targeted approach to the fluid situation in the face of an uncertain inflation and growth trajectory. This scaffolds the positive impact of the fiscal measures and strengthens our response to the adverse economic impact of the pandemic. - Joseph Thomas, Head of Research - Emkay Wealth Management

    12:42 (IST)27 Mar 2020
    A welcome step in light of the degenerating economic conditions: Aditi Nayar, ICRA

    The comprehensive announcements made by the RBI prior to the scheduled policy review are a welcome step, in light of the degenerating economic and credit conditions. The combination of moratoriums, liquidity enhancing measures and the sharper-than-hoped-for repo rate cut will help to assuage the markets in these increasingly unsettled times, and offer some protection against widespread defaults, even though the actual impact on boosting economic activity may be limited.Regardless of the measures announced now by the RBI, we are lowering our base case scenario for GDP growth to -4.5% for Q1 FY2021 and to 2.0% for FY2021, in light of the rapidly growing uncertainties over the duration of the impact of the coronavirus on economic activity in India and the rest of the world. 

    12:39 (IST)27 Mar 2020
    RBI has checked all the required boxes of the rate cut, liquidity infusion and moratorium

    We are delighted with the Reverse Bank’s announcements which have far exceeded the expectations of the industry. The apex bank has checked all the required boxes of the rate cut, liquidity infusion and moratorium. These steps will help the economy to stay stable despite the lockdown and economic disruption. We are hopeful that these measures will be complemented by further fiscal stimulus measures by the Central and State Governments to support demand in the economy. We welcome these measures by RBI and see this as a big relief for the economy in general and for the real estate sector which would have been one of the worst affected owing to its linkages with the overall economy. - Shishir Baijal, Chairman & Managing Director, Knight Frank India

    12:31 (IST)27 Mar 2020
    RBI's announcement to address the short term delinquency concerns in retail, MSME or corporate loans.

    The announcement of the moratorium measures was on expected lines and really appropriate in the current context of economic lockdown. The 3-month moratorium on all term loan installments along with deferment of interest on working capital for 3 months without any downward revision in the asset categorization for almost every lending institution in the country including banks and NBFCs will address the short term delinquency concerns in retail, MSME or corporate loans. This will also be a significant relief for the NBFC and the MFI sector whose operations are likely to be very severely impacted in this lockdown period. The flexibility provided to banks to redefine and recalculate drawing power based on margin adjustments will also help in providing additional working capital facilities in the current scenario. - Suman Chowdhury, President – Ratings, Acuité Ratings & Research Limited 

    12:29 (IST)27 Mar 2020
    Today's announcement may not necessarily promote growth but avert a collapse

    This would not necessarily promote growth but avert a collapse, so a big positive to boost sentiments - Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers

    12:25 (IST)27 Mar 2020
    Today’s announcement infused some assurance in the mind of the panicked citizens

    Today’s announcement infused some assurance in the mind of the panicked citizens that the economy will revive back in the short run and the banking sector is safe and sound. The reverse repo rate cut by 90 bps helps keep a balance of liquidity amongst banks which largely acts as a reassurance factor to the borrowers. Major announcements like the moratorium of three – months by banks and lending institutions, the accessibility and opportunity of deferred interest on working capital and a total liquidity injection of Rs 3,74 lakh crore to the system will help prevent financial stress on the borrowers. - Ashok Mohanani, Chairman EKTA World and Vice President NAREDCO Maharashtra.

    12:23 (IST)27 Mar 2020
    Repo rate may drop to 3.50% by August 2020

    The RBI has surpassed expectations by delivering more than what the market anticipated, and its promise to 'do whatever it takes' has come good. The steps to ease working capital pain, reduce liquidity costs and provide a moratorium on term loans will alleviate stress across various sectors. We continue to see rates dropping to 3.50% by August 2020.- Rahul Bajoria, Chief India Economist, Barclays

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