The RBI's COVID-19 response gives a booster to the Indian economy
Life tends to grind to a complete halt in some situations and the current Coronavirus, or COVID-19 outbreak is no exception. We've felt consequences on business activity and individual incomes too. To restore confidence among taxpayers and businesses, the Reserve Bank of India (RBI) has come out with some measures. Some of the new RBI policies for Coronavirus include a rate cut and a moratorium on EMIs. Both should make things a little easier for consumers like you. Let's break down each update to understand them better.
What the rate cut is all about
The first RBI COVID-19 response is to reduce repo, or repurchase rate, by 75 basis points to 4.4 percent. This means that if your bank decides to implement the new rate, your existing home loan may become more affordable. However, you'll have to check with your bank for updates.
The central bank also introduced a cut in the cash reserve ratio (CRR) – the fraction of deposits that banks have to keep in cash – by 100 basis points. This will mean that banks will be able to lend an additional Rs. 137,000 crore. So more loans for consumers who need them in these times.
Moratorium on EMIs
When your income takes a hit, you naturally start worrying about your ability to repay. Be it home or personal loan EMIs or credit card bills, all these get affected. Well, with the new RBI updates on Coronavirus, you may have to worry any more. The central bank has announced a moratorium on EMIs for the next three months.
So what does this moratorium mean? Let's take a look
- If your monthly income is affected by COVID-19, you can choose to apply for a moratorium on all your outstanding loan payments for the next three months.
- The policy applies to all types of loans (corporate, home, car and personal loans)
- All commercial, regional, rural, NBFCs and small finance banks will be permitted to allow a three-month moratorium on payment of instalments for all term loan EMIs outstanding as on 31 March
- Whether or not the moratorium will be given to customers will depend on the bank or financial institution
- Your credit score will be unaffected by the delayed payment
- Interest is not exempted during the period of the moratorium. So you will continue to pay it for the period for which the EMI has been deferred
- Credit card dues too will be eligible for the three-month moratorium. However, you will have to continue to pay interest on outstanding dues
*Disclaimer: The above information is for your knowledge and information.
In addition to the RBI COVID-19 response, the finance ministry has also come up with new measures. Read this article to find out.
In these challenging times, you can see some relief on your outgoing monthly payments. Stay safe and stay indoors. We care for your health and safety, #smartbanking with DBS Bank.
