Global Economy

Pass on rate cuts, FinMin tells PSBs

NEW DELHI: The finance ministry has directed public sector banks to ensure last-mile implementation of the rate cut announced by the Reserve Bank of India (RBI) on Friday.

It has asked the lenders to pass on the 75-basis-point rate cut and ensure adequate flow of funds to the industry, particularly Micro, Small and Medium Enterprises, particularly in light of the ongoing nationwide shutdown necessitated by the Covid-19 virus outbreak. One basis point is one-hundredth of a percentage point. The Department of Financial Services under the finance ministry sent out a communique to all public sector banks soon after the RBI announcement.

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“PSBs have been asked to implement the RBI package,” a government official told ET. The finance ministry has asked the lenders to ensure rate cuts are passed on and adequate credit is extended to the MSME sector, the official said.

RBI governor Shaktikanta Das on Friday reduced the repo rate to 4.4% and the reverse repo rate by 90 basis points to 4%.

He also announced a reduction in the Cash Reserve Ratio (CRR) to 3% from 4% along with a moratorium on loan repayments for three months.


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