RBI is trying to arrest a potential breakdown caused by corona virus. so, RBI had announced a cut the leading rate for three months, which affect the country directly and indirectly. They announced installments on term loans for three months.
Global financial crises:
The lockdown is expected to have a negative impact on the cash flow in the companies. But companies can get the loan at low cast which will develop the economical growth in all aspects. The covid-19 has wide impact on all the system globally and broken the values of the company. India, had many small scale industries. They were affected because of cut-down in lending rate. Bank also find very difficult to reduce a lending rate in short term. Loans were the main source for revenue. But now it reduced. It will cause the global financial crises. India will face great financial crises in future because of this pandemic covid-19. RBI, Governor Shaktikanta Das announced to cut the policy rate, which cause many economical issues.
Effects of cut-down:
This cut-down will affect economic directly. Economic slowdown has been aggregate by decline in consumption. Many families were leading their livehood through lending, if it has been slowdown them consumption rate were reduced. Money is the backbone to lead a life. If this cut-down as been expanded after three months there export and import. India will come under a financial crises. It also failed to boost GDS.
Advantages of moratorium:
There were several Advantages. Mainly offered a relief to financially stressed homeowners, farmers because of announcing three months moratorium an loan Repayment. It has a greater advantage to industrial sectors because industries can get the chief loans from the repo rate. Bank also find it difficult to reduce a lending rate in the small period. people was affected. covid-19 had turned India’s economy. everything will have both a positive and negative impacts to the people and the country. Due to this financial crises, Bank passes on the benefit of lower interest rate to its customers.
RBI had announced many worthy ideas to support banks and all sectors of economy to over come ongoing adverse impact of covid-19. pandemic covid-19 going to continue after three months, in such cases bank will take a responsibility for the economy crises of India. Covid-19 had put a world to struggle to the greater extent. It mainly affects the economic development of the country.
Reason for the sudden lending rate:
If the loans had been given to the respective owners, unfortunately they will affect by a pandemic disease. loans cannot be payed properly by the owner. in that cases, Bank should take a full responsibility towards the interest. Bank cannot offer the loans from their family because they were already in lack of economy. In such cases Bank will have the huge lose. In order to overcome come such crises, they made cut-down pattern. RBI has announced all best praise worthy measures to support banks and all sectors of economy to overcome ongoing adverse impact of Covid-19. Export and import of the country also reduced which lead the nation to face the crises.
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