The RBI will also allow banks a six-month moratorium on payments of instalments on loans.
Apart from this, the repayment schedule and all subsequent due dates, as also the tenure for such loans, were shifted across the board by three months. "Elevated level of inflation in pulses worrisome, requires review of import duties", he said.
MPC is of the view that headline inflation in first half of 2020 will be stay intact but by Q3 and Q4 it may fall below the target of 4 percent.
Briefing the media, Das said that the pandemic has severely impacted the global economy, including India's.
The central bank refrained from giving a projection for GDP growth for the current financial year, as it stopped at saying GDP growth expected in the "negative territory" with some pick-up in growth impulses from the second half of 2020-21 onwards.
Researchers at Goldman Sachs downgraded their GDP forecasts for India significantly this week, estimating that GDP would fall by 5% this fiscal year compared to a previously projected drop of 0.4%. "Simultaneous fiscal, monetary and administration measures will create conditions for a gradual revival of activity in the second half of 2020-2021".
This is the third presser by the RBI Governor after the COVID-19 lockdown came into place. "It will enable states to meet about 45% of redemption of their market borrowings which are due in 2020-21", he added.
The central bank set the 25 percent limit in June 2019 and capped lenders' exposure to a single party at 20 percent.
Among other announcements, the RBI also extended the special refinance facility of Rs 15,000 crore to SIDBI that it had earlier announced at RBI's policy repo rate for another period of 90 days.
This is another big step which will ease liquidity for developers - the rate cut will not only send out positive signals but will enable banks to lend even more.
A further reduction in the repo rate is good news for those in debt but the opposite for those with investments.
Governor Shaktikanta Das reduced the benchmark repurchase rate by 40 basis points to 4%, the lowest since the measure was introduced in 2000, and pledged to take "whatever measures are necessary" to support the economy. Job losses are also expected to be widespread, the governor said. "Our decision and its magnitude seeks to do this in the near term".
Such a move will, however, have a "significant sobering impact" on asset quality of banks as RBI research shows, they added.
"Timing and size of the cut reflects sharp intensification of economic pressure amid an extended lockdown (next scheduled meeting 5 Jun); RBI appears to favour easing when not expected for maximum impact". Lowering the cost of capital is some relief in these times.
To cushion the economy against the economic fallout of the coronavirus, the Reserve Bank has introduced measures to increase liquidity in the market, including buying government bonds in the secondary market.