RBI policy: Laser-focused on supporting growth

The policy actions of the RBI over the last few months have shown a clear focus on supporting growth.

- GAURA SENGUPTA

The central bank has unleashed rate cuts, liquidity gush as well as easing of macroprudential norms to support growth. Policy rates are 50 basis points (bps) lower with back-to-back rate cuts since February. The effective rate cuts are closer to 75 bps with overnight rates closer to SDF, which is the lower end to the policy rate corridor. Even more significant has been the durable liquidity infusions measures, taking both analysts and the markets by surprise.

To give context to the significant turnaround in liquidity conditions, the RBI has purchased government bonds worth ₹5.23 trillion spread over December 2024-end to May 2025. The speed of the infusion has been even faster than the response to Covid-19 shock, where the similar quantum of OMO purchases took 12 months. Macro prudential norms is another key piece of policy support with the RBI gradually reversing the tightening in regulation, such as bank lending to NBFCs or delaying implementation of LCR regulation for retail deposits with internet and mobile banking.