The Financial Crisis 2007-08 : How RBI Saved India
The financial crisis of 2007-08 was undoubtedly the worst financial crisis since the great depression (1929-1933). It later came to be known as the subprime crisis or the mortgage crisis that emanated from the U.S financial sector. The infamous 'casino capitalism' was the root cause of the crisis. It later led to the collapse of the giants like the Merril Lynch and Lehman brothers. But due to the conservative measures undertaken by the Reserve Bank of India (RBI), combined with the effective and timely actions of the government of India, Indian economy survived. The measures India undertook to stay out of trouble attracted worldwide appreciation and boosted the credibility of banking sector in India. RBI adopted the accommodative monetary policy at the time. It pursued a cheap monetary policy, which instilled confidence in the public, thus saved the SENSEX and NIFTY from suffering a hit. RBI took appropriate measures to reduce CRR, SLR, repo rates, reverse repo rates inorder to inject money directly into the workforce and adviced development banks to write off the loans taken by the marginal section of the society especially that of the farmers. The proof of Indias successful implementation of the policies stated earlier lies on the fact that not even a single banking institution collapsed in India.
The G-20 meeting that was held at London highlighted the role of central banks in general and RBI in particular. Many institutions like the IMF, World Bank and the WTO, praised India's RBI to the core. Indian economists work today as the policymakers and advisors in almost every major financial institution in the world.