RBI wards against panic withdrawals amid spiraling stock markets; assures depositors

In what can be termed as a sense of relief for depositors, the Reserve Bank of India cleared the air about the dropping share prices amid the COVID-19 scare and reassured the depositors that their money would remain safe. Addressing the media via a video conference, RBI governor Shaktikanta Das, on Thursday, said there was a pattern of panic withdrawal witnessed amongst customers in the wake of the falling share prices owing to the pandemic. Urging the public to trust the financial institutions, Shaktikanta Das assured that the funds would remain safe with the banks and that there was no necessity to worry about the safety of their funds invested. 

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'Depositors not at risk'

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Repo rate slashed

RBI announced a 'sizeable reduction' in the policy repo rate of the country, slashing it by 75 base points to 4.4%, RBI governor Shaktikanta Das announced on Friday. The RBI governor revealed that the Monetary Policy Committee (MPC), which preponed its meeting, voted in a majority of 4:2 to have a sizeable deduction in the policy repo rate. The reverse repo rate was slashed by 90 base points to 4%. The latest rate cut is by far the biggest by the central bank among a series of cuts that have been a highlight of Shaktikanta Das' tenure as Governor. However, the latest measure, which has come as an emergency measure and not within the RBI's bi-monthly policy-review framework, is three times the size of the cut generally applied.

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This comes after minutes after influential Moody's Investors Service slashed India's 2020 GDP growth projection from its earlier forecast of 5.3% to 2.5% amid the global Coronavirus pandemic. The Indian government had earlier projected GDP growth at 5% in 2019-20 as compared to 6.1% in 2018-19. Q3 had witnessed a 4.7% growth. India has announced a Rs 1.7 lakh crore Coronavirus relief package, split between assuring food security and Direct Benefit Transfer cash-transfer as the country observes a 21-day lockdown to combat COVID-19, of which over 700 infections have been confirmed thus far.

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Watch the full briefing here: https://www.youtube.com/watch?v=99i3lVow5gQ