The Reserve Bank of India on Friday announced a bigger-than-expected cut in its benchmark lending (repo) rate -- from 6% to 5.5%, surprised markets by slashing cash reserve ratio from 4% to 3% to infuse liquidity to the tune of Rs 2.5 lakh crore and announced a sudden pivot to a “neutral” monetary policy stance. While the rate cut was cheered by industry and consumers, the push for liquidity and the about turn on policy stance have stoked new concern. That the liquidity push might have heightened many risks for the banking systems, while the policy shift might undermine RBI's credibility.Veteran financial journalist Kalyan Ram, who keeps a close watch on the central bank joins me to discuss the risks and rewards associated with RBI's latest decisions.
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