R K Gurumurthy, Head – Treasury, Lakshmi Vilas Bank : After the series of 
announcements last week primarily as an economic rescue package to thwart the deleterious effects on growth, today’s rate cut is more a front loaded monetary measure in an environment where inflation is likely to remain low. Measures like extension of moratorium by another 3 months, increase in single exposure by 5 percentage points to 30%, extension of 150b rupee line to EXIM for swap facilities and export credit tenor increase by 3 months will support the small and large sectors of the economy, alike.
Anagha Deodhar – Economist, ICICI Securities: The 40bps rate cut should ease the cost of credit further. However, in the absence of demand for credit and extreme risk
aversion among banks, we remain doubtful about its effectiveness in stimulating growth. We expect the various regulatory measures taken by the RBI such as measures to support exports and imports, extension of moratorium, easing of working capital financing etc. to support the sectors that have been badly affected. These measures should cushion the stress faced by these sectors going forward. Also, rate cuts and liquidity infusion are likely to support growth in FY21. Interestingly, the rate cut wasn’t unanimous this time, indicating committee members are questioning the effectiveness of monetary action in stimulating growth.”
George Alexander Muthoot, MD, Muthoot Finance: We welcome the RBI announcement to cut the repo rate by 40 bps which will infuse liquidity into the system in such challenging times. Also, the reduction in reverse repo rates will discourage banks to park idle money with RBI and lend further. We appreciate the decision of extending the moratorium by three months thereby providing the much-needed relief to the borrowers. It will help in reducing the repayment pressure and provide the necessary time to analyze the cash flow status. We believe RBI measures will aid in restoring the financial health of the economy.”
Rajan Wadhera, President, SIAM : 40 bps reduction in repo rate, which takes the 
repo rate to 4%, is a very welcome step by RBI to support reduction in the cost of borrowing for traders and consumers and hence would positively impact consumer demand. We are hopeful that banks will pass on the benefit and support demand creation for discretionary products, like automobiles.”
