RBI steps up liquidity support amid government credit push

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The Reserve Bank of India has unveiled new liquidity measures to support a government push to encourage banks to lend to the non-bank financial sector.

Though the measures may help support India’s sagging growth rate, they could also impact the RBI’s attempts to clean up the banking sector.

As part of the new government’s budget, published on July 5, the fiscal authority is extending a credit guarantee to public sector banks that lend to non-bank financial firms that are deemed creditworthy.

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