By reducing REPO rate by 100 basis points how much money would have floated in the market? what is the liquidity?
2 Replies
CA Hemantkumar,M.COM,ACA,DISA,cVa.
(Chartered Accountant)
(98 Points)
Replied 21 October 2008
i can't tell u how much liquidity will be there But certainly it will boost the liquidity.
CA CS CIMA Prakash Somani
(Landmark Group)
(23502 Points)
Replied 21 October 2008
The sole purpose of govt behind reducing repo rate is to boost investment and to flow money into the market. It is hard to say how much liquidity comes to market. the reason is if banks borrow from RBI and lend to institutions than only this money will come into the market. If banks show no interest in borrowing and lending the money to institutiones than it may not have impressive results. Whatever be the cause this is aq good step taken by govt to boost liquidity into indian market to curb inflation, to incaurage investors to be faithfull, to lend more money etc etc. Repo rate is diff from CRR bcz CRR has directly impacted the banks positvely as the banks neednot to maintain the cash reserve with RBI to the extent of CRR cut.
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