RBI Cuts Report Rate To 4% To Boost Liquidity; GDP To Remain In Negative Zone

Mumbai: Amid sluggish economic sentiment due to COVID pandemic, RBI Governor Shaktikanta Das today announced another 40 basis point cut in key lending rates. While the repo rate has been reduced to 4 percent, the reverse repo rate has been cut to 3.5 percent.

Addressing media, Das said GDP Growth in 2020 will remain negative in 2021. There will be gradual revival of activity and demand by the second half of FY21, he added. Monsoon prediction by the MET department is also bringing us a lot of hope to the agriculture sector, he added.

Further, the RBI has also extended the moratorium period allowed on term loans and working capitals in view of the extension of the lockdown continuing disruption on account of Covid-19. The moratorium will now continue till Aug 31st.

Briefing the measured taken by the RBI, Shaktikant said, Group Exposure Limit of banks is being increased from 25% to 30% of eligible capital base for enabling the corporates to meet their funding requirements from banks.

The increased limit will be applicable up to 30th June, 2021.

He said, measures announced today can be divided into 4 categories: to improve functioning of markets, to support exports and mports, to ease financial stress by giving relief on debt servicing and better access to working capital, and to ease financial constraints faced by state governments.

RBI Governor Shaktikanta Das also said that the GDP growth in 2020-21 is expected to remain in the negative with improvement in the second half.