Published On: Fri, May 22nd, 2020

RBI slashes repo rate by 40 bps to 4 per cent to increase credit flow

Mumbai: The Reserve Bank of India (RBI) on Friday slashed its key policy rate for a second time this year, in a move to counter the economic fallout from an ongoing nationwide lockdown to contain the spread of the novel coronavirus.

RBI Governor Shaktikanta Das in Mumbai on Friday.

It cut the repo rate by 40 basis points to 4%. The reverse repo rate was also reduced by 40 basis points to 3.35% in an effort to further boost liquidity in the economy which has been reeling under the impact of COVID-19 induced countrywide lockdown.

In a video conference, RBI Governor Shaktikanta Das said the central bank’s six-member Monetary Policy Committee (MPC) had voted 5:1 to maintain its “accommodative” stance.

Repo rate is the rate at which a country’s central bank lends money to commercial banks, and the reverse repo rate is the rate at which it borrows from them.

TST

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