Earlier RBI had decided on 50 basis points with a view to inject liquidity into domestic financial markets so as to alleviate the pressures brought on by the deterioration in the global financial environment. In the ensuing days, the global situation has worsened further, a release issued by RBI said here.
International stock markets and money markets had been adversely affected in a significant manner. Central banks across the world have responded to these extraordinary developments by synchronised policy actions, including measures for liquidity infusion.
In the context of the abrupt changes in the international financial environment, it is important to note that the macroeconomic fundamentals of the Indian economy are strong and resilient and that India's financial system is sound, well-capitalised and well-regulated, the statement said.
Money and Forex markets in India have been operating in a relatively orderly manner. The current domestic market conditions are essentially a reflection of the adverse developments and extreme uncertainty in international financial markets, it said.
Market participants are assured that the Reserve Bank stands ready to respond swiftly to meet any liquidity requirements that may arise in the context of the highly volatile external situation, the RBI assured.
As a result of the 150 basis points reduction, an amount of about Rs 60,000 crore would be released into the system (instead of the injection of Rs 20,000 crore announced earlier with the 50 basis points).
The RBI is monitoring developments closely and continuously and would respond swiftly and even pre-emptively to any adverse external developments impinging on domestic financial stability, price stability and inflation expectations and the continuation of the growth momentum of the Indian economy, the RBI said.