Some of them also said that the Reserve Bank of India (RBI) may have to deepen the rate cut if the COVID-19 crisis prolongs.
The RBI, which advanced a meeting of the rate setting panel by a week, announced a 0.75 per cent cut in its policy rates, infusion of Rs 3.76 lakh crore of liquidity through moves like a cut in cash reserve ratio and also allowed banks to not treat any term loans as NPAs for three months if there is no repayment.
"RBI, very correctly so, announced a comprehensive bazooka covering all aspects of the economy by taking measures system-wide both through liquidity, rates and regulatory forbearance (retail as well as for industry) and also targeted measures to manage the corporate bond markets," Kotak Mahindra Bank's senior economist Upasana Bharadwaj said.
She said the measures should help in tiding issues which many banks/institutions were fearing and will go a long way in cushioning the dislocations in various markets.
The bank expects additional scope for 0.40-0.50 per cent cut depending on the nature of spread of COVID-19, she added.
Singaporean lender DBS's economist Radhika Rao said RBI has pulled out all stops with the aggressive rate cut and said the intention seems to be to reduce cost of funds while lowering incremental capital burden on banks.
The central bank has also addressed banks' reticence in buying commercial paper by making it possible to hold them under the hold to maturity portfolio rather than mark to market, which affects their earnings, she said.
"While India has limited fiscal space, monetary policy continues to do the heavy lifting at a time when growth is at a severe risk in the near term," SBI Mutual Fund's chief investment officer Navneet Muhnot said.
He said we need to explore unconventional measures on fiscal, administrative and regulatory fronts on the lines of lead taken by RBI.
Consulting firm Deloitte's partner Himanish Chaudhuri said the announcement is welcome and has allayed a lot of concerns which the industry was having.
Industry lobby CII's director general Chandrajit Banerji welcomed the RBI moves but added that it expects the central bank to extend the repayment moratorium if the crisis prolongs.
Domestic rating company Acuite's president Suman Chowdhury said while the rate cut of 75 bps is indeed sharp and goes beyond the market expectations, the extent of the transmission by the banking system will have to be seen. AA SHW DRR