RBI cut repo rate by 250 basis points till onset of COVID-19: RBI Governor

The Reserve Bank of India (RBI) has cut the repo rate by 135 basis points since February 2019 till the onset of COVID-19. This was shared RBI Governor Shaktikanta Das while delivering his keynote address at the 7th SBI Banking & Economics Conclave on July 11, 2020. 

The RBI Governor said that repo rate was cut overall by 250 basis points since February 2019 to alleviate liquidity stress and provide financial stability in the economy. The main aim behind the move was to tackle the slowdown in economic growth. 

Das stated that they had elaborately touched upon issues concerning economic growth during the meeting of the Monetary Policy Committee (MPC). The MPC has decided to cumulatively, cut the policy repo rate by 115 basis points.

From February 2019 onwards,on cumulative basis, we had cut the Repo rate by 135 basis points till the onset of #COVID19. That was done mainly to tackle the slowdown in growth which was visible at that time & we had elaborately touched upon its in our MPC Resolutions: RBI Governor pic.twitter.com/Ez752pK5T8

— ANI (@ANI) July 11, 2020

Worst Health & Economic Crisis in 100 years: RBI Governor

The RBI Governor stated that this is the worst health and economic crisis in the last 100 years with unprecedented negative consequences for jobs, output and well being. Das stated that it has dented the existing world order, global value chains, labour and capital movements across globe.

He further stated that the coronavirus pandemic has represented the biggest test of resilience and robustness of our economic and financial system. 

#COVID19 is the worst health & economic crisis in last 100 years with unprecedented negative consequences for output, jobs & well being. It dented the existing world order, global value chains, labour&capital movements across globe: RBI Guv at 7th SBI Banking & Economics Conclave pic.twitter.com/NFDzJ0gkFT

— ANI (@ANI) July 11, 2020

The new RBI measures aim to propel a cyclical turnaround in economic activity at a time when COVID-19 along with other calamities have hit the world, causing miseries and endangering of thousands of lives and livelihood of people.

Impact

According to Shaktikanta Das, COVID may result in higher non-performing assets (NPAs) and capital erosion of banks.