The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo price unchanged at 4 per cent, as was anticipated. The MPC also maintained an accommodative stance “as long as necessary to sustain growth on a durable basis” and continue to mitigate the influence of COVID-19 on the economy, though guaranteeing that inflation remains inside the target going forward, RBI Governor Shaktikanta Das announced Wednesday. The next meeting of the MPC is scheduled through June 2-4, 2021. All members of the MPC — Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Mridul K Saggar, Michael Debabrata Patra, along with RBI Governor Das unanimously voted for maintaining the policy repo price unchanged. This was the very first bi-month-to-month MPC meeting of FY22 and was the fifth time in a row exactly where RBI kept the repo price unchanged.
Here’re the crucial takeaways from the policy outcome
Repo, reverse repo prices: The RBI MPC decided to preserve the repo price unchanged at 4 per cent on the back of increasing COVID-19 situations, imposition of restrictions and lockdown in the state of Maharashtra. The reverse repo price remained changed at 3.35 per cent and the marginal standing facility (MSF) price and the bank price at 4.25 per cent.
Growth projection: Due to the on-going vaccination programme, the gradual release of pent-up demand, and the investment-enhancing and development-supportive reform measures taken by the government, the projection of true GDP development for FY22 is retained at 10.5 per cent. For every single quarter RBI sees the true GDP development of 26.2 per cent in very first quarter (Apr-Jun) 8.3 per cent in Q2 (Jul-Sep) 5.4 per cent in Q3 (Oct-Dec) and 6.2 per cent in Q4 (Jan-Mar).
Inflation: RBI has revised the projection for CPI inflation to 5 per cent in Jan-Mar quarter of FY 21 5.2 per cent in Apr-Jun quarter, 5.2 per cent in Jul-Sep quarter 4.4 per cent in Oct-Dec quarter and 5.1 per cent in Jan-March quarter of FY22. This has been announced taking into consideration the trajectory of meals inflation, progress of the south-west monsoon in 2021, higher international commodity costs and logistics charges.
Liquidity: During April-August 2020, unique refinance facilities of Rs 75,000 crore had been supplied to All India Financial Institutions (AIFIs) like NABARD, SIDBI, NHB and EXIM bank. RBI Governor Shaktikanta Das has additional announced liquidity help of Rs 50,000 crore for fresh lending through 2021-22. RBI will provide Rs 25,000 crore to Nabard (National Bank for Agriculture and Rural Development) Rs 10,000 crore to National Housing Bank (NHB) and Rs 15,000 crore to Sidbi (Small Industries Development Bank of India).
VRRR auctions: Despite the recommencement of 14-day variable price reverse repo (VRRR) auctions considering that January 15, 2021, liquidity absorbed by means of the fixed price reverse repo has steadily enhanced from a fortnightly typical of Rs 4.3 lakh crore through January 16-29 to Rs 4.9 lakh crore through January 30-March 31, 2021, Shaktikanta Das stated. In the view of the accomplishment of VRRR and offered the increasing level of surplus liquidity, RBI has decided to conduct VRRR auctions of longer maturity, he added.
New bond getting strategy G-SAP 1.: RBI will place in spot a secondary marketplace government securities acquisition programme or G-SAP 1. for this economic year to allow an orderly evolution of the yield curve. For the very first quarter of 2021-22, RBI will conduct a G-SAP of Rs 1 lakh crore and the very first obtain of government securities for an aggregate quantity of Rs 25,000 crore will be performed on April 15, Das stated.
TLTRO scheme extension: RBI governor announced that On-tap Targeted Long Term Repo Operations (TLTRO) scheme, which was out there till March 31, 2021, has now been additional extended by a period of six months to September 30, 2021, to assure sufficient liquidity help to the economy.
RTGS, NEFT facilities for payment operators: RBI has extended NEFT and RTGS facilities to non-bank payment technique operators. So far, only banks had been permitted to use these facilities. With today’s announcements, prepaid payment instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms can also use these facilities.
Interoperability of PPIs, and improve in account limit to Rs 2 lakh: To an try to market digital transaction, RBI has proposed to hike the limit of the outstanding balance in wallets to Rs 2 lakh from Rs 1 lakh.
Extension of interim WMAs limit: To aid state governments tide more than the economic strain triggered by COVID-19 pandemic, RBI has announced an extension of interim methods and indicates advances (WMAs) limit of Rs 51,560 crore. Additionally, RBI has enhanced the aggregate WMA limit of states and Union Territories (UTs) to Rs 47,010 crore per year.