India’s central bank has joined the global fight against the severe economic fallout of the Covid-19 pandemic.
To safeguard the country’s economy, Reserve Bank of India (RBI) governor Shaktikanta Das today (March 27) deployed conventional tools such as interest rate cuts and unconventional ones such as putting loan repayments on hold.
The rate cuts are the biggest since the 2008 global economic crisis. The repo rate, at which the RBI lends to commercial banks, is down 75 basis points (bps) to 4.4%, the lowest since 2004. The reverse repo rate, at which the RBI borrows from lenders, was slashed by 90 bps to 4% so as to “discourage lenders from depositing money” with the central bank.