Updated on Jan 19, 2021 22:35:01


Cut in repo rate bring down cost of capital and mitigate impact of pandemic COVID-19 : PHD Chamber

5 Dariyanews

5 Dariyanews

5 Dariya News

27 Mar 2020

PHD Chamber appreciate significant cut in repo rate by 75 basis points by RBI from 5.15% to 4.4%, cut in CRR from 4% to 3% and a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020, said Dr. D K Aggarwal, President, President, PHD Chamber of Commerce and Industry in a press statement issued here today.These measures will provide adequate liquidity in the system, bring down the cost of capital and mitigate the impact of pandemic COVID-19, said Dr D K Aggarwal. We are hopeful that the banking sector will transmit the full effect of cut in repo rate and lower the lending rates immediately, said Dr Aggarwal.Now the banking sector will have a Rs. 3.74 lakh crore more liquidity which is very much adequate at this point of time, said Dr. Aggarwal . Lower cost of  credit and increased liquidity will help the businesses  to meet up their day to day liquidity requirements and mitigate the impact pandemic COVID-19, he said . The reverse repo rate cut by 90 basis points to 4 percent is appreciable as it will make it unattractive for banks to passively deposit funds with the RBI and instead lend it to the productive sectors, said Dr Aggarwal.It is highly encouraging that banks are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020 by RBI. Measures such as conducting auctions of long term repo operation (LTRO) of three-year tenure upto Rs1 lakh crore at floating rate linked to policy rate; increasing Marginal Standing Facility (MSF) limit to 3% of SLR from 2% would go a long way in creating liquidity in the economy and mitigate the impact of Pandemic COVID-19 on industry, said Dr Aggarwal. Lending institutions are allowed to defer interest on working capital repayments by three months is highly appreciable at this juncture and will boost confidence of industry stakeholders, said Dr Aggarwal.Permitting banks to deal in Offshore Non-deliverable Rupee derivative Markets (Offshore Rupee NDF Markets) by RBI is encouraging as it will remove segmentation between the onshore and offshore markets and improve efficiency of price discovery, said Dr Aggarwal.


Tags: Mix India



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