RBI ALLOWS ONE-TIME RECAST OF RETAIL LOANS
MUMBAI/NEW DELHI: The Reserve Bank of India (RBI) kept interest rates on hold on Thursday and gave lenders the power to restructure certain loans — including individual as well as corporate loans — as it sought to strike a balance between helping revive growth in pandemic-battered economy and keeping rising inflation in check.
RBI governor Shaktikanta Das sounded a note of caution that a prolonged spread of Covid-19 poses “downside risk” for the domestic economy, but assured that the central bank will use the available monetary space “judiciously” to boost growth.
“At the end of its deliberations, the monetary policy committee (MPC) voted unanimously to leave the policy repo rate unchanged at 4% and continue with the accommodative stance of monetary policy as long as necessary to revive growth and mitigate the impact of Covid-19, while ensuring inflation remains within the target going forward,” Das said after the rate-setting panel concluded its three-day meeting. Das warned India’s real gross domestic product (GDP) growth is set to contract in 2020-21, but did not give a specific forecast.
“An early containment of the Covid-19 pandemic may impart an upside to the outlook. A more protracted spread of the pandemic, deviations from the forecast of a normal monsoon and global financial market volatility are key downside risks,” he said. The repo rate was left at 4.0% and the reverse repo rate at 3.35%.