RBI's Cash Influx Seen a Small Relief Amid Global Uncertainty

The decision by India's central bank to cut rates and flood the banking system with cash will do little to immediately boost demand in Asia's third-largest economy as global uncertainties restrain corporate investment, bankers and sources said.

- Reuters

MUMBAI:

The infusion of liquidity, along with two consecutive rate cuts, will at best prevent further deceleration in growth, which probably fell to a four-year low of 6.5% in the financial year ended March 31, 2025, they said.

The Reserve Bank of India's (RBI) rate actions and liquidity measures are a "welcome relief" for banks but the global macroeconomic outlook has become more uncertain due to the recent trade tariff-related measures and the volatility surrounding them, said Sashidhar Jagdishan, CEO of HDFC Bank, India's largest private lender by assets.

"Corporates have adopted a wait-and-watch stance, and we are waiting for more clarity," he added.

On April 9, the RBI cut rates by 25 basis points to 6%, a second cut in as many meetings, and slashed India's growth forecast for 2025-26 by 20 basis points to 6.5%.