India covid-19 2020 pandemic economy India

Opinion | After repo rate cut, RBI can focus on bond yields, sectoral incentives

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If CPI inflation falls below 4%, it could allow another 50bps reduction in policy rate The Reserve Bank of India (RBI) has announced a new set of measures to mitigate the impact of the covid-19 pandemic on the economy.

Incentivizing banks to lend, rather than depositing excess liquidity with the RBI, the reverse repo rate has been further reduced by 25 basis points to 3.75%.

Banks deposited ₹4.9 trillion net surplus liquidity with RBI on 16 April. Lower rates incentivize banks to lend rather than keep deposits with RBI.

Liquidity injections of ₹1 trillion under Targeted Long-Term Repo Operations (TLTROs), part of RBI’s earlier ₹3.74-trillion liquidity enhancing measures for banks, were largely accessed by public sector enterprises and

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