The government is taking various steps to ease the liquidity situation in the country. Now, the Reserve Bank of India (RBI) cuts rapo rates after successive cuts in the cash reserve ratio (CRR). The apex bank slashed rapo rates by 100 basis points. This is the step against the tight monetary policy adopted by the central bank. It is the first ever reduction in the rapo rates after March 2004. Rapo rates now stands at 8 percent.

The banks also started to slash the interest rates for consumers after revision of rapo rates. The fifth-largest state-owned bank, Union Bank of India reduced interest rates on home loan by 50 basis points up to a loan Rs 30 lakh.

The Chairman & Managing Director of bank, M V Nair said the bank expects further decline in home loan rates in the coming months. Uco Bank Chairman & Managing Director, SK Goyel said that it would revise the interest rates by the end of month. State Bank of India is also all set to reduce the prime lending rate. Punjab National Bank had reduced interest rates on home, auto and education loans by 50 basis points while other state-owned Corporation Bank announced various discount schemes for the festival season. Top economists said the lowering of lending rates by banks would help to recover the stock market.