The central bank also reduced the cash reserve ratio of all banks by 100 basis points to 3 per cent with effect from March 28 for 1 year
New Delhi: The Reserve Bank of India (RBI) on Friday cut benchmark interest rate by 75 basis points to 4.4 per cent to deal with the hardship caused due to the outbreak of COVID-19.
The central bank also reduced the cash reserve ratio (CRR) of all banks by 100 basis points to 3 per cent with effect from March 28 for 1 year.
RBI will maintain accommodative stance, Governor Shaktikanta Das said while announcing decisions of Monetary Policy Committee (MPC).
"MPC voted for sizeable reduction in interest rate," he said.
RBI Governor said his address was coming amidst "extraordinary circumstances". He said the MPC voted for sizeable reduction in repo rate to revive growth, mitigate covid-19 impact.
"India has locked down economic activity. Keeping finance flowing is the paramount objective of the RBI. India has locker down economic activity and financial activity is under severe stress," said Shaktikanta Das.
"Time has now come for the RBI to launch an array of arsenals to mitigate the impact of Covid-19."
"Finance is the lifeline of the economy," said Das
RBI permits all lending institutions to allow 3-month moratorium on payment of installments on term loans.
Shaktikanta Das' address to the media has been scheduled a day after Finance Minister Nirmala Sitharaman announced a slew of measures to help the lower strata of the society.
The economy has been battered by the coronavirus (COVID-19) pandemic and governments across the globe have taken measure to combat the impact.