The Reserve Bank of India (RBI) decreased its repo interest rate by 25 basis points to 6.50 percent on Tuesday, bringing it to a five-year low (FT, BBC, Reuters, Post, WSJ). Repo interest rate is the rate at which the central bank lends to private banks in the country. India's central bank governor, Raghuram Rajan, announced the policy, highlighting that "Retail inflation measured by the consumer price index (CPI) dropped sharply in February after rising for six consecutive months." Analysts expect more interest rate cuts by the RBI in early summer.
The governor of the Reserve Bank of India, Raghuram Rajan, said on Thursday that the Indian banking system’s health was concerning and needed to improve (ET, Reuters). He said the central bank was taking steps to help the banks in the country manage their loan portfolios. Banks in India are currently estimated to have $120 billion in bad or non-performing loans, and there is an expectation that this number will be revised even higher in the coming weeks.