The Reserve Bank of India (RBI) has cut the repo rate by 250 basis points since February 2019 to alleviate liquidity stress and provide financial stability in the economy, said Governor Shaktikanta Das on Saturday.
Till the onset of COVID-19 in February this year, the RBI has cut the repo rate by 135 basis points.
"From February 2019 onwards, on a cumulative basis, we had cut the repo rate by 250 basis points till the onset of COVID-19. That was done mainly to tackle the slowdown in growth which was visible at that time and we had elaborately touched upon its in our MPC Resolutions," Das said while delivering the keynote address at the 7th SBI Banking and Economics Conclave.
"COVID-19 is the worst health and economic crisis in the last 100 years with unprecedented negative consequences for output, jobs and well being. It dented the existing world order, global value chains, labour and capital movements across the globe," he added.
"COVID-19 pandemic perhaps represents so far the biggest test of robustness and resilience of our economic and financial system," Das said.
This may result in higher non-performing assets (NPAs) and capital erosion of banks, the RBI Governor said.
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