On situation across the world, Shaktikanta Das said that 'global economy and the outlook is highly uncertain and negative.' (Photo Credit: File Photo)
The Reserve Bank of India slashed the repo rate by 75 basis points to 4.4 per cent after unscheduled Monetary Policy Committee meet on Friday. Making the key announcement during the press conference in Mumbai, RBI Governor Shaktikanta Das said that the global economy is 'highly negative'. He also said that the RBI won't give out data on GDP and inflation as 'the situation is fast-changing and outlook is extremely uncertain.' In other major announcement, the RBI lowered the cash reserve ratio lowered to 3 per cent from 4 per cent for all banks for a period of one year. In a massive relief for the salaried class during corona lockdown, Das said that all banks, lending institutions may allow a three-month moratorium on all loans. The announcement was made keeping in view the condition during the coronavirus lockdown in the country. (Coronavirus Outbreak Live Updates)
Das also tried to assure the public about the reported cash crunch. "Indian banks are safe and there is no need to resort to panic withdrawals," Das said. "It would be fallacious to link share prices to the safety of deposits. Depositors of commercial banks including private sector banks need not worry on the safety of their funds," the RBI Governor furher added. He also said that the RBI is vigilant about the situation and it will continue to take necessary steps to mitigate the situation. "India has locked down economic activity and financial markets are under severe stress. Finance is the lifeline of the economy, keeping it following is the paramount objective of the Reserve Bank of India at this point of time," Das said.
On situation across the world, Das said that 'global economy and the outlook is highly uncertain and negative. Several nations are battling its exponential contagion. Countries are shutting down to prevent being sucked into a kind of black hole.' Voicing the fears of the corporate world, Das said that 'the outlook is now heavily contingent upon the intensity, spread and duration of the pandemic. There is a rising probability that large parts of the world will slip into recession.'
Meanwhile, Moody's Investors Service on Friday slashed its estimate of India's GDP growth during 2020 calendar year to 2.5 per cent from an earlier estimate of 5.3 per cent, on account of the rising economic cost of the coronavirus pandemic. This compares to 5 per cent growth in 2019. Moody's said, at the 2020 estimated growth rate, a sharp fall in incomes in India is likely, further weighing on domestic demand and the pace of recovery in 2021. "In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors," it said.
(With agency inputs)
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