P Chidambaram terms RBI's moratorium on EMIs as 'ambiguous', 'half-hearted'

Former Union finance minister P Chidambaram called the Reserve Bank of India's (RBI) direction on the deferment of equated monthly instalments (EMIs) as "ambiguous" and "half-hearted".

The senior Congress leader further called for the dates of the EMIs to be automatically deferred.

Taking to Twitter, Chidambaram said, "I welcome the RBI's decision to cut the repo rate and measures to provide more liquidity. However, the RBI's direction on deferment of EMI dates is ambiguous and half-hearted. The demand is that all EMI due dates must be automatically deferred."

"I had suggested that all due dates falling before June 30 may be deferred till June 30. Borrowers have been made dependent on the bank concerned and will be disappointed," he said in another tweet.

Chidambaram's remarks came shortly after the RBI lowered the key repo rate by 75 basis points to 4.4 per cent in a bid to arrest the economic slowdown amid coronavirus outbreak.

The reverse repo rate now stands at 4 per cent, down by 90 basis points, said RBI Governor Shaktikanta Das adding this has been done to make it unattractive for banks to passively deposit funds with the central bank and instead lend it to the productive sectors.

The six-member monetary policy committee (MPC) met on March 24, 25 and 27 and voted 4:2 in favour of the repo rate reduction. The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy while ensuring that inflation remains within the target.

"The need of the hour is to shield the economy from the pandemic," said Das and added, "We need to mitigate the impact of coronavirus, revive economic growth and provide financial stability.