Mumbai: – Reserve bank of India (RBI) announced its bi-monthly credit policy. Everyone was apprehensive about what decisions the RBI would take in the credit policy, while there is a massive price rise, as the Coronavirus pandemic is rampant again. RBI did not make any change in the interest rates, as expected by the markets. RBI also announced the purchase of government bonds worth ₹1 trillion, in this quarter, from the open markets. The balance limits for the accounts in payment banks have also been raised. The stock market was enthused with the RBI decisions, reflecting in the stock indices, showing an increase of more than 600 points in Sensex. The investors were benefited by nearly ₹2 trillion due to this.
The RBI has decided to reduce interest rates during the Coronavirus pandemic last year. The decision not to change the interest rates had been taken in the last two credit policies. Almost all the financial experts and credit rating agencies claim that the Indian economy has recovered and there will be a significant increase in the Indian growth rate. But the second wave of the Coronavirus pandemic has posed a challenge to the growth. Rising fuel costs and other price increases also are factors posing a challenge. Against this background, everyone was eagerly waiting for the decisions of the RBI.
RBI governor, Shashikanta Das, announced the Credit policy on Wednesday. RBI has maintained the REPO rate at 4%. This comes as a major relief for the borrowers. The RBI governor expressed concerns over the current inflation index. The food grain prices will be dependent on the upcoming monsoon. The RBI Governor predicted that the inflation index would hover around 4-4.5% for 2021-22. Das also expressed a possibility that the economic growth rate will be around 10.5%.
Das clarified that there is no need to allow a moratorium for loans to borrowers, given the current situation. RBI announced the decision to purchase government bonds worth ₹1 trillion from the open markets to strengthen the economy during the Corona times.
A direct effect of these decisions was visible in the stock markets. There was a jump in stocks of the banking sector. Shares of SBI, Union Bank, Bank of India, IDFC banks appreciated. There was a positive sentiment even in the shares of Reliance Industries and Bharti Airtel, along with shares of auto companies like Bajaj Auto, Mahindra and Mahindra, Maruti and leading companies like Infosys, Dr Reddy’s Lab and Asian Paints. Sensex increased by 660 points and NIFTY increased by 180 points.