RBI:Repo rate unchanged at 4%; stance accommodative

In its outlook for the rest of the year, the RBI MPC noted that inflation was expected to remain elevated in the second quarter of 2020-21 and ease thereafter in the second half of the year. On the economic growth front, Governor Das said, without putting any number to it, that India's real gross domestic product would contract in the first half of FY21 as well as full financial year.

In the run-up to the announcement, experts had mostly been divided over the possibility of a rate cut, with many ruling it out saying a call on restructuring of loans and discontinuation of moratorium was more likely. Finance Minister Nirmala Sitharaman had said that focus was now on restructuring. "The focus is on restructuring. The finance ministry is actively engaged with the RBI on this. In principle, the idea that there may be a restructuring required is well taken," she had said last week.

The six-month moratorium given by the RBI ends on August 31. Rating agency Icra had said in a report that an extension of moratorium and one-time restructuring of loan could pose challenges to lenders and also impact their financial stability if the quantum was large.