The Reserve Bank of India (RBI) on Friday announced a 40 bps cut in repo rate to 4 percent from 4.4 percent earlier. Repo rate is the rate at which the central bank lends money to commercial banks.
The central bank also extended the moratorium relief for all term loans and working capital loans by another three months and observed that India's GDP growth in 2020-21 is likely to remain in the negative territory.
To help analyse the measures and throw light on the economic stress due to the COVID-19 pandemic, CNBC-TV18 spoke to Sanjeev Sanyal, Principal Economic Adviser to the government.
Talking about proposal of bad bank he said, “There are clear issues and risks with NPAs mounting as this plays out. That is the reason that we have taken many measures. Whether or not the bad bank is the best way to respond to it, we will consider. But do be careful with putting all hopes on this one bad bank. Remember a bad bank does not resolve the fact of the NPAs.”