Indian banks won’t lower their guard amid Covid-19 despite the central bank’s insistence

In a surprising move last Friday (May 22), India’s central bank announced yet another steep cut in repo rate. This is the second reduction in the rate at which banks borrow money from the Reserve Bank of India (RBI) since the spread of Covid-19 started hurting the country’s businesses and economy in March.

Now, the repo rate stands at an all-time low of 4% (pdf).

The intention of these cuts is to make borrowing cheaper for banks so they would dole out more loans to companies, which could potentially give India’s shrinking economy a much-needed jumpstart.

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