RBI Cuts Repo Rate by 40 Bps to 4 Per Cent to Increase Credit Flow
File image of RBI Governor Shaktikanta Das | (Photo Credits: PTI)

Mumbai, May 22: The Reserve Bank of India (RBI) on Friday reduced repo rate by 40 basis points to 4 per cent in an effort to further boost liquidity in the economy which has been reeling under the impact of COVID-19 induced countrywide lockdown. As a result, the reverse repo rate stands at 3.35 per cent, said RBI Governor Shaktikanta Das. RBI Slashes Repo Rate by 40 Basis Point to 4%, Reverse Repo at 3.35%; Loans Set to Get Cheaper.

The six-member monetary policy committee (MPC) voted 5:1 in favour of the decision. Repo rate is the rate at which a country's central bank lends money to commercial banks, and the reverse repo rate is the rate at which it borrows from them.