In the face of plummeting stock market triggered by global meltdown, Government and the RBI on Friday acted swiftly to inject more cash into the banking system to avert any panic with Finance Minister P Chidambaram saying that deposits in banks are 'completely safe'.
Following a near-1100 point fall in the Bombay stock market within minutes of opening, worst in the last two years, the Reserve Bank of India stepped in to cut the cash reserve ratio by 100 basis points which together with 50-basis point cut on Monday would release Rs 60,000 crore into the banking system to ensure liquidity.
The finance minister, who rescheduled his visit to Washington to interact with global leaders on global meltdown, sought to assuage fears of the business, market and the industry on liquidity crunch with a promise that the RBI would act further in this direction if needed.
"We have responded swiftly and have infused a huge amount of liquidity... No depositor need have any reason to worry... The last thing you should do is to act in haste or give room for panic,"
Chidambaram told PTI adding the fundamentals of the economy were strong.
The market, which started recovering on the twin moves, again went south as the IIP figures released by the government showed industrial growth plummeting to 1.3 per cent in August from 10.9 per cent in the comparable period last year.
{{/usCountry}}The market, which started recovering on the twin moves, again went south as the IIP figures released by the government showed industrial growth plummeting to 1.3 per cent in August from 10.9 per cent in the comparable period last year.
{{/usCountry}}The market finally closed the day 800 points lower at 10,527.8, down more than half since January this year.