Home Blogs RBI slashes repo rates

RBI slashes repo rates

Reading Time: 2 minutes

Markets Update

Nifty50

9039.25

1.07% ▼

Sensex

30672.59

1.37% ▼

Nifty500

7416.00

1.17% ▼

Nifty Bank

17278.90

8.26% ▼

Last week, benchmark indices closed in red

The Bigger Picture

The Reserve Bank of India (RBI) on Friday decided to cut the repo rate by 40 basis points (0.4%) from 4.4% to 4%
The reverse repo rate has been reduced to 3.35%
It also extended the moratorium on EMI payment of loans by another 3 months till August 31st
These steps were taken in order to provide the much needed liquidity and some breathing space for an otherwise slowing economy

Through the Looking Glass

Through the Looking Glass is a multi-part series that will explore trending topics in business + finance, the impact of COVID-19 on the economy, and other relevant topics to help you see beyond the news. The series will feature insights from industry leaders, experts, and our editorial team.

In Part 3 of this series, Siddhartha Rastogi shares some insights and strategies for investing during and after COVID-19. Learn about the behaviour of HNIs, FIIs, AMCs and how business cycles will affect the markets.

If you haven’t already, do check out the other articles in this series here.

Matter of Fact

What are the Repo and Reverse Repo rates?

Repo and reverse repo rates are the primary tools which the RBI uses to control the level of interest rates in the economy. Repo stands for Repurchase Agreement.

The Repo Rate is the rate at which the RBI lends money to banks for short durations. Cutting the repo rate would mean that banks can borrow money from the RBI at a cheaper rate and can thus in turn lend out money at a cheaper rate as well – this incentivises business and individuals to borrow money and increase spending/investments.
The Reverse Repo Rate is the rate at which banks can park their money with the RBI. This was cut to discourage banks from parking idle funds with the RBI and spur lending instead, to revive a flagging economy amid the Covid-19 crisis.

Investing Insights

Freedom for the Farm

Last week, the Finance Ministry rolled out a host of relief measures to combat the crisis caused by the novel coronavirus. A major beneficiary of this is Indian Agriculture. The industry employs about 50% of India’s workforce and accounts for roughly 18% of India’s GDP.

With agriculture being rural India’s primary source of income, the focus is back on the future of rural India, which is expected to drive the country to become an economic powerhouse. We dissected what the government’s relief measures might mean for rural India – read it here.

[cta color=”blue” title=”Get the smallcase App” url=”http://link.smallcase.com/” button_text=”Download Now”]Discover ideas, invest & track your portfolio on the go[/cta]

Naveen K R

Senior Director, Windmill Capital | The content in this article is purely the author’s personal opinion and is for informational and educational purposes only. It should not be construed as professional financial advice and nor to be construed as an offer to buy /sell or the solicitation of an offer to buy / sell any security or financial products. The views and opinions stated in the content belong to the author. Windmill Capital Private Limited does not uphold nor promote any of the views / opinions. | Windmill Capital Private Limited is a SEBI registered research analyst (Regn. No. INH200007645)

Freedom for the Farm

Laborers can Work from Home too

Cancel reply

Dislaimer: This platform is intended for informational purposes only and is not intended to provide investment advice. The stock prices displayed are delayed and may not reflect the most current market conditions. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. You can also consider consulting a financial advisor before making any investment decisions. Smallcase Technologies Private Limited shall not be responsible for any losses that may occur as a result of using this platform.

The views expressed in this article are those of the author and do not necessarily reflect the views of Smallcase Technologies Private Limited (STPL) or any of its associates. The information provided in this article is for educational and informational purposes only. Investors are responsible for their investment decisions and are responsible to validate all the information used to make the investment decision. Investors should understand that his/her investment decision is based on personal investment needs and risk tolerance, and performance information available on here is one amongst many other things that should be considered while making an investment decision. Past performance does not guarantee future returns.

Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The examples and/or scurities quoted (if any) are for illustration only and are not recommendatory.

The content and data available on the website, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk. Data used for calculation of live returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here. Detailed volatility calculation methodology is available here.

The user agrees to assume complete and full responsibility for the outcomes of all of his/her investment decisions that he/she makes, including any direct, indirect, incidental, consequential, special, punitive or any other losses/damages if any that may be incurred by him/her. Smallcase Technologies shall not be responsible or liable for any direct, indirect, incidental, consequential, special, punitive or any other losses/damages arising out of the recipient's investments. For disclosures related to Smallcase Technologies Pvt Ltd, please visit this page .