Reading Comprehension – Test 154

Read the following passage carefully and choose the most appropriate answer to the questions out of five alternatives.<br><br> The Monetary Policy Committee (MPC) has cut the repo rate by 35 basis points (bps), announced continuance of an accommodative stance and relaxed the norm for how much of a bank's paid-up capital can be lent to a single non-banking financial company (NBFC). Is this unconventional dose of adrenaline enough to spur the somnolent economy into a canter, if not a gallop? Unfortunately, not. The Monetary Policy Statement brings out the reality that low rates and liquidity do not constrain the economy. RBI has had to absorb surplus liquidity of nearly ₹2 lakh crore from the banks. The money market rate has been below the repo rate for most of July and August. The problem is not liquidity in general, but the broken system of mediating the liquidity that is available to those who would deploy it in economic activity. The challenge is to fix the mechanism of mediation.<br><br> RBI governor Shaktikanta Das pointed out that while the policy rate has come down 75 bps during February-June, banks have reduced their lending rates by only 29 bps. The weighted average money market rate has come down by 78 bps, the 10-year g-sec yield by 102 bps. The problem is with the banks. And the problem is a combination of a pile of bad loans and the cloud of bad faith that hangs over lending decisions and can shower searches and arrest warrants against bankers who do decide to lend. Banks must be recapitalised, so that their bad loans are provided for, and they can resume lending. Bankers must be given the assurance that the government no longer wears the lenses that make the suited-booted banker look like a witch waiting to be hunted. RBI's moves on NBFCs are welcome. But these are no substitute for a functional debt market. RBI, Sebi and the government must work real hard to make the debt market come alive and offer medium- to long-term loans for infrastructure projects. <br><br> Slashing rates by 35 bps, dumping multiples of 25 bps as the quantum of rate change, signals non-routine concern over growth, as also restraint to avert any panic. It also signals RBI's capacity to go beyond convention.

What is the possible solution to revive the somnolent economy mentioned in the passage?

Read the following passage carefully and choose the most appropriate answer to the questions out of five alternatives.<br><br> The Monetary Policy Committee (MPC) has cut the repo rate by 35 basis points (bps), announced continuance of an accommodative stance and relaxed the norm for how much of a bank's paid-up capital can be lent to a single non-banking financial company (NBFC). Is this unconventional dose of adrenaline enough to spur the somnolent economy into a canter, if not a gallop? Unfortunately, not. The Monetary Policy Statement brings out the reality that low rates and liquidity do not constrain the economy. RBI has had to absorb surplus liquidity of nearly ₹2 lakh crore from the banks. The money market rate has been below the repo rate for most of July and August. The problem is not liquidity in general, but the broken system of mediating the liquidity that is available to those who would deploy it in economic activity. The challenge is to fix the mechanism of mediation.<br><br> RBI governor Shaktikanta Das pointed out that while the policy rate has come down 75 bps during February-June, banks have reduced their lending rates by only 29 bps. The weighted average money market rate has come down by 78 bps, the 10-year g-sec yield by 102 bps. The problem is with the banks. And the problem is a combination of a pile of bad loans and the cloud of bad faith that hangs over lending decisions and can shower searches and arrest warrants against bankers who do decide to lend. Banks must be recapitalised, so that their bad loans are provided for, and they can resume lending. Bankers must be given the assurance that the government no longer wears the lenses that make the suited-booted banker look like a witch waiting to be hunted. RBI's moves on NBFCs are welcome. But these are no substitute for a functional debt market. RBI, Sebi and the government must work real hard to make the debt market come alive and offer medium- to long-term loans for infrastructure projects. <br><br> Slashing rates by 35 bps, dumping multiples of 25 bps as the quantum of rate change, signals non-routine concern over growth, as also restraint to avert any panic. It also signals RBI's capacity to go beyond convention.

What do the banks need?

Read the following passage carefully and choose the most appropriate answer to the questions out of five alternatives.<br><br> The Monetary Policy Committee (MPC) has cut the repo rate by 35 basis points (bps), announced continuance of an accommodative stance and relaxed the norm for how much of a bank's paid-up capital can be lent to a single non-banking financial company (NBFC). Is this unconventional dose of adrenaline enough to spur the somnolent economy into a canter, if not a gallop? Unfortunately, not. The Monetary Policy Statement brings out the reality that low rates and liquidity do not constrain the economy. RBI has had to absorb surplus liquidity of nearly ₹2 lakh crore from the banks. The money market rate has been below the repo rate for most of July and August. The problem is not liquidity in general, but the broken system of mediating the liquidity that is available to those who would deploy it in economic activity. The challenge is to fix the mechanism of mediation.<br><br> RBI governor Shaktikanta Das pointed out that while the policy rate has come down 75 bps during February-June, banks have reduced their lending rates by only 29 bps. The weighted average money market rate has come down by 78 bps, the 10-year g-sec yield by 102 bps. The problem is with the banks. And the problem is a combination of a pile of bad loans and the cloud of bad faith that hangs over lending decisions and can shower searches and arrest warrants against bankers who do decide to lend. Banks must be recapitalised, so that their bad loans are provided for, and they can resume lending. Bankers must be given the assurance that the government no longer wears the lenses that make the suited-booted banker look like a witch waiting to be hunted. RBI's moves on NBFCs are welcome. But these are no substitute for a functional debt market. RBI, Sebi and the government must work real hard to make the debt market come alive and offer medium- to long-term loans for infrastructure projects. <br><br> Slashing rates by 35 bps, dumping multiples of 25 bps as the quantum of rate change, signals non-routine concern over growth, as also restraint to avert any panic. It also signals RBI's capacity to go beyond convention.

What shows RBI's ability to act unconventionally according to the circumstances?