RBI Governor Shri Shaktikanta Das gives Monetary policy statement

RBI Governor Shri Shaktikanta Das gives Monetary policy statement
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New Delhi: The governor of Reserve Bank of India delivers the important three key elements of the Bi-monthly monetary policy on Friday. The three broad parts include MPC Deliberation and decision on MPC, guidelines on Financial Market, and in the third part, he gives certain important announcements that RBI is making. 

 

He further spells out the broad approach of the Reserve Bank of India’s policy going forward. While the newly appointed Monetary Policy Committee with Dr. Ashima Goyal, Professor Jayanth R Varma, and Dr. Shashanka Bhide member meet on 7, 8, and 9th October headed by the RBI governor.    

 

RBI keeps the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 percent. Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 percent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 percent.

 

The MPC also decided to continue with the accommodative stance as long as necessary at least during the current financial year and into the next financial year to revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

 

These decisions align to achieve the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent while supporting growth. RBI also decided to give RTGS facilty 24X7 from December and India will be the first country who will do so.  

 

While talking about the NBFCs he said, “In 2018, the RBI had released the guidelines on co-origination of loans by banks and non-deposit taking NBFCs. The Reserve Bank of India (RBI) decided to extend the co-origination scheme to all non-banking financial companies (NBFCs) including home finance companies (HFCs) to allow greater operational flexibility to the lending institutions.”

 

This will help at leveraging the reach of NBFCs to help banks meet their priority sector lending targets, leveraging the reach of NBFCs.

 

In other important announcements, he also gives a point of easing the risk weights on individual home loans, which aims towards the boosting nation’s real estate sector and generating economy activity. In all individual housing loan, the risk weight will be ease 35 percent if the loan value is at the 80 percent or lower and in the case of home loans where the LTV (Loan-to-Value) ratio is higher than 80 percent but less than and equal to 90 percent than the risk weights will be higher at 50 percent. This is beneficial only new housing loans till march 31.  

 

 

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