The magnitude of the cut in repo rate - the key interest rate at which the RBI lends short-term funds to commercial banks - has been the highest under Shaktikanta Das, and also the steepest since January 2009. Until now, the largest cut by Mr Das was of 35 basis points in August last year and considering the latest reduction, he has slashed the rates by a total of 210 basis points.

The RBI Governor also announced a cut of 100 basis points in the cash reserve ratio for a period of one year, a step he said will ensure sufficient liquidity in the system. CRR or cash reserve ratio is the amount of cash commercial banks have to mandatorily park with the Reserve Bank of India. "This would release liquidity worth Rs 1,37,000 crore within banks," the RBI Governor said.

The central bank also permitted all commercial banks and lending institutions to allow a three-month moratorium on all loans, in view of the ongoing lockdown to protect the 130 crore people in the country from the deadly virus. "Banks should do all they can to keep credit flowing," Mr Das added.

The priority is to undertake "strong and purposeful action" to protect the economy, and there is a need for all stakeholders to fight against the coronavirus pandemic, the RBI governor said via video conference.

The surprise moves came as India entered the third day of a 21-day countrywide lockdown to curb the rapid spread of the coronavirus pandemic. The Monetary Policy Committee was originally scheduled to meet early next month.

"Indian banking system is safe and sound... In spite of the challenging environment, I remain optimistic," the RBI Governor said.

The RBI has already infused Rs 2.7 lakh crore into the country's financial system since the February policy meeting, Mr Das said, adding that the central bank's overall liquidity injection stands at 3.2 per cent of GDP.

The central bank will continue to be vigilant and take "whatever steps necessary" to mitigate the impact of the coronavirus on the economy, Mr Das assured. He further asserted that the central bank will maintain its "accommodative" stance of policy "as long as necessary" to revive growth, while ensuring inflation remained within target.

On Thursday, Finance Minister Nirmala Sitharaman had announced a Rs 1.7 lakh-crore fiscal package to support the poor through direct cash transfers and food security measures, without giving details on how the programme will be funded.