India central bank puts in massive liquidity in banks |
India`s central bank, RBI has announced massive liquidity boosting measures including cuts in repo rate, reverse repo rate and CRR. The RBI Governor, Shaktikanta Das announced a massive 75 basis points cut in repo rates as a measure to counter the economic slowdown caused by the COVID-19 pandemic. The reverse repo rate has been cut by 90 basis points to 4 percent. Das said this has been done to make it unattractive for banks to passively deposit funds with the RBI and instead lend it to the productive sectors. The RBI rate cut comes just a day after Finance Minister Nirmala Sitharaman announced a 22.9 billion dollar relief package for the poor. Das, in the press conference, hinted about using unconventional methods if needed. In the present scenario, considering the weak sentiments in the economy, the effectiveness of monetary stimulus will be limited. According to analysts, RBI has surpassed expectations by delivering more than what the market anticipated, and its promise to `do whatever it takes` has come good. The steps to ease working capital pain, reduce liquidity costs and provide moratorium on term loans will alleviate stress across various sectors.
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