From February 2019 till COVID-19 began, the Reserve Bank of India ( RBI) has cut the repo rate by 135 basis points. That was shared by RBI Governor Shaktikanta Das while delivering his keynote address on July 11, 2020 at the 7th SBI Banking & Economics Conclave.
Covid - 19's Adverse Effect on REPO Points
The RBI Governor said repo rate has been cut overall since February 2019 by 250 basis points to alleviate liquidity stress and provide financial stability in the economy. The main aim behind the move was to tackle the economic growth slowdown. Das stated that during the Monetary Policy Committee (MPC) meeting, they had extensively touched on economic growth issues. The MPC has agreed to slash the policy repo rate by 115 base points cumulatively.Worst Health & Economic Crisis in 100 years Says RBI Governor
The RBI Governor claimed that this is the worst health and economic crisis of the last 100 years with unparalleled negative impacts on employment, production, and well-being. Das said the existing world order, global value chains, labor, and capital movements across the globe have been dented.
RBI Governor further claimed that the coronavirus pandemic has represented our economic and financial system 's largest test of resilience and robustness. The new RBI initiatives seek to accelerate a cyclical turnaround in economic activity at a time when COVID-19 has struck the world along with other calamities, causing poverty and endangering thousands of people's lives and livelihoods. According to Shaktikanta Das, COVID may result in higher non-performing assets (NPAs) and capital erosion of banks.