 "The announcements will unclog the liquidity deficiency in the system where cash flows have dried up due to the slowdown, says Siddharth Purohit")
The Reserve Bank of India governor Shaktikanta Das’ decision to cut the reverse repo rate by 25 basis points (0.25 per cent) to 3.75 per cent from 4 per cent, while maintaining the repo rate at 4.4 per cent, is a welcome step. In his bid to fight the coronavirus (Covid-19) induced slowdown, the governor has made it clear that he doesn’t want banks to park money with the RBI.
His other decision, allowing banks to cut the liquidity coverage ratio (LCR) requirement to 80 per cent from 100 per cent, also underscores the same intent.
The announcements will unclog
