Where the
economy is already facing recession amid the Corona virus hurt, the Reserve
Bank of India (RBI) made several important announcements? The announcements
include an amount of Rs 50 thousand crore for long term repo operations.
RBI chief
Shaktikanta Das also said that apart from this, special financial facility of
Rs 50 thousand crore will be given to the institutions like NABARD and SIDBI
and National Housing Bank. The aim of all these steps is that there must not be
shortage of cash in the market for a long time. RBI says that given more
circumstances if needed, more cash can also be added to the system.
The RBI has done
the reverse repo rate slashing by 25 basis points, to 3.75 per cent. According
to the head of the Reserve Bank, Shaktikant Das, the purpose of this exercise
is that banks should use the additional funds they have to lend more and more.
The reverse repo rate is the interest rate at which the RBI keeps the money of
other banks.
A few days ago,
the RBI described the Corona virus crisis as a black shadow going to take in
its grip the future. The central bank had said in its monetary policy report
that the consequences of announced lockdown will directly affect the country's
economy. RBI said that due to Kovid-19 (corona virus disease), production,
distribution system, business and tourism have been affected all over the
world.
Earlier last
month, RBI had announced a major slash in the repo rate by 75 basis points.
After this biggest cut in RBI history, the repo rate has come down from 5.15 to
4.40 per cent. The reverse repo rate was also reduced by 90 basis points to
four percent, which is now facing another cut of 25 basis points.
