Mumbai: Reserve Bank of India on Wednesday expectedly left interest rates unchanged and maintained an accommodative stance as the economy faces a renewed threat to growth due to the resurgence of coronavirus cases.
The central bank kept the benchmark repo rate unchanged at 4 per cent and maintained accommodative policy stance to support growth.
Repo Rate refers to the interest rate at which banks borrow money from the RBI to meet short term liquidity needs. The Repo Rate, in turn, will influence lending rate to bank customers.
RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) kept its estimate for economic growth unchanged at 10.5 per cent for the current fiscal.
Highlights of RBI Monetary Policy
- RBI to maintain accommodative monetary policy stance to support growth, keep inflation at targeted level. Accommodative stance means the RBI will cut rates to inject money into the financial system when there is a need.
- RBI says recent surge in COVID-19 infections has created uncertainty over economic recovery, focus be on containing virus spread
- Projects 26.2 pc and 8.3 pc growth in June and September quarters; 5.4 pc and 6.2 pc in December and March quarters respectively
- Retail inflation projection revised to 5 pc in March quarter 2020-21
- Projects retail inflation at 5.2 pc in June and September quarters
- Gains from inflation targeting framework of 4 pc (+/- 2 pc) since 2016 reinforced by the retention of the target and the tolerance band by the government for next five years
- To ensure ample liquidity in system so that productive sectors get adequate credit
- Rs 50,000 crore additional liquidity facility to NABARD, NHB and SIDBI for fresh lending
- Will continue to do whatever it takes to preserve stability and to insulate financial firms from global spillovers
- Enhances maximum balance limit at end of the day from Rs 1 lakh to Rs 2 lakh per individual customers of payments banks
- To set up a committee for comprehensive review of the working of Asset Reconstruction Companies (ARCs)
- RBI has extended interim ways and means advances (WMAs) limit of Rs 51,560 crore to state governments till September, to help them tide over the financial stress posed by the second wave of COVID-19. WMAs are temporary advances given by the RBI to the states to tide over any mismatch in receipts and payments.
- RBI has urged the Centre and States for a coordinated action to provide relief to petrol and diesel consumers by reducing taxes. Petrol has breached the Rs 100 per litre in many parts of the country and diesel is sold above Rs 80 per litre in major metros.
- Amid an increase in localised lockdowns across the country, Reserve Bank Governor Shaktikanta said that there is no need for a loan repayments moratorium at present, stating that businesses are better prepared to face the situation.
(PTI)
Also read: Lockdown for one month to shave off 2% of GDP: Report
