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RBI allows banks to defer interest on working capital loans by 3 months

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RBI allows banks to defer interest on working capital loans by 3 months

RBI allows banks to defer interest on working capital loans by 3 months
The Reserve Bank of India's (RBI) monetary policy committee, in order to provide some relief from the damage caused by the deadly coronavirus, decided to defer interest payment on working capital loans by three months for lending institutions.
"In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020," said the central bank.
The accumulated interest for the period will be paid after the expiry of the deferment period.
SBI chief Rajnish Kumar said the decision to decide whose working capital interest repayments will be suspended will be decided on a "case-to-case basis".
The central bank also asked all lending institutions to permit three-month moratorium on EMI payments in order to infuse liquidity into the system as the economy struggle to deal with COVID-19.
Governor Shaktikanta Das has announced a 75 basis points cut in the repo rate to reduce the impact of coronavirus. With the 75 basis points cut, the repo rate currently stands at 4.4 percent. The reverse repo rate has been cut by 90 basis points "so that banks are incentivised to lend, disincentivised to hoard money".
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