According to experts, the Reserve Bank of India (RBI) may further cut the key policy rate repo by 0.25 percent in the upcoming monetary policy review to revive the economy that is suffering from the outbreak of Corona Virus. A three-day meeting of the Monetary Policy Committee (MPC) headed by the RBI Governor is to begin on August 4 and an announcement will be made on August 6.

The central bank is constantly taking steps to limit the damage to the economy and the impact of the lockdown from the outbreak of the Covid-19 epidemic. Earlier, the MPC met in March and May 2020, in which the policy repo rates were cut by a total of 1.15 percent. ICRA Principal Economist Aditi Nair said, “We are expecting a 0.25 percent reduction in the repo rate and 0.35 percent in the reverse repo rate.”

Expressing similar opinion, Union Bank of India managing director and CEO Rajkiran Rai said, “There is a possibility of a 0.25 percent cut or they can keep the rate unchanged.” Nair further said, however, retail inflation MPC’s The target has crossed the two-six percent mark, but it is expected to come back within this range by August 2020.

Industry association Assocham says that in view of the problems facing the industries, RBI should focus more on debt restructuring. Assocham said that there is a need for immediate restructuring of loans to prevent large scale defaults in the industry. As is evident from the latest RBI report, restructuring is necessary for both banks and borrowers.

Assocham Secretary General Deepak Sood said, “Restructuring of debt should be one of the main priorities of the Monetary Policy Committee.” A public sector banker said that there is enough cash in the system at the moment and rate cuts are being pursued. In such a situation, no purpose will be accomplished by further reduction in rates.