The Reserve Bank of India cut its policy repo rate, or the rate at which it lends to banks, by 25 basis points from 6% to 5.75% and changed its stance from neutral to accommodative.
Citi economists wrote in a note on Thursday that the RBI could deliver another rate reduction as early as August, and that the monetary policy committee members now appear to agree on the importance of stimulating growth in a benign inflation environment.
Meanwhile, ANZ Research economists predicted three more rate cuts of 25 basis points each over the next six months. "Given little room on the fiscal side we expect monetary policy to continue to do the heavy lifting to revive demand," ANZ economists wrote.J. P. Morgan's Aziz pointed out there's a major liquidity problem in India right now — especially in the shadow banking sector.
An Indian naval officer walks past the logo of India's central bank, the Reserve Bank of India , in Mumbai on November 9, 2016.that slowed lending in India over the last several years, non-banking financial companies became important financiers to millions of small- and medium-sized businesses as well as individuals.
, leading the government to intervene. Reuters reported that the company has a total debt of 910 billion rupees and is trying to sell its assets to repay them.of another non-banking financial company, Dewan Housing Finance Corp, to default. That prompted further concerns in the market.
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