The governor of the Reserve Bank of India, Shaktikanta Das, held a press conference on the morning of March 27, 2020, to address the economic uncertainty that is being caused by the coronavirus pandemic. To shield the people from the harsh economic situation, the RBI governor proposed the following measures:
The RBI governor and the Monetary Policy Committee (MPC) voted that the repo rate would be reduced by 75 basis points, with the new repo rate being 4.4%. The reverse repo rate would be cut by 90 basis points, and the new reverse repo rate would be 4%.
The governor also outlined that the GDP growth rate from the last quarter of 19-20 and FY 20-21 would be negatively affected. The other factor was that the aggregate demand would weaken, and the cash reserve ratio cut by 100 basis points to 3% for a period of one year until 1.37 lakh crores were released. The minimum daily cash reserve ratio balance would be cut to 80% from the initial 90% until the end of June 2020.
To boost liquidity in the economy, 3.74 lakh crore would be injected. A three-month moratorium on installment payments of outstanding term loans would be granted. An interest rate deferment of 3 months on WC facilities interest rates was issued, and this deferment would not be stated under NPA. The WC cycle would be assessed, and DP calculations revised. These measures would inject 3.4 % liquidity into the economy. The governor also stated that the measures would not affect credit history.
