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RBI brings out the big guns, cuts rate by 75bps to 4.40%

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MUMBAI : The Reserve Bank of India (RBI) cut interest rates by the most in a decade, pledged to add ₹3.7 trillion in banking system liquidity and offered a three-month moratorium on interest payments to all borrowers to help deal with the economic fallout of the coronavirus pandemic.

In an emergency meeting, RBI’s monetary policy committee (MPC) on Friday cut the repo rate, the rate at which banks borrow from RBI, by 75 basis points (bps) to 4.40%.

With this rate cut, RBI has reduced policy rates by 210bps since February 2019. The central bank announced in the morning that it is permitting banks to defer instalment payments on all term loans and working capital loans by three months.

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