The transparent monetary policy of India has increased confidence

In a report issued by the Bank for International Settlements, it has been stated that amidst the challenges posed by the pandemic, significant steps taken under the monetary policy framework have fostered trust among Indian citizens.

The report mentions that, in addition to providing forward guidance, the Reserve Bank of India used communication channels transparently to explain the reasons behind the steps taken, which led to successful control of the inflation rate and communication of trust and confidence to the general public.

Furthermore, market confidence remained steady with interventions in the exchange rate stability, foreign exchange reserves adequacy, and policy directions concerning the management of foreign investment.

India adopted a comprehensive strategy, encompassing confidence-building measures such as increasing the limit on external commercial borrowings and relaxing restrictions on foreign investments in the bond markets. To reduce pressure on the property market, restrictions on banks’ participation in asset markets were eased.

The Reserve Bank also initiated support for borrowers by taking individual and small businesses’ loans. These measures include temporary loan restructuring, easy provisioning of working capital, and a framework for the reorganization of borrowers’ accounts through special resolution schemes.

The objective of these measures was to provide loans to individuals and small businesses, including postponing installment payments for a temporary period, making access to working capital easier, and allowing the restructuring of borrowers’ accounts under the special resolution framework.