Shakti Kanta Das, the Governor of the Reserve Bank of India (RBI) on the 6th of August, conducted a press conference.
During the press conference, Mr. Das announced repo rate and reverse repo rate for the loans.
After discussing with the six member Monetary Policy Committee (MPC) the RBI Governor announced unchanged repo rate and reverse repo rate.
This is the 24th MCP meeting of the RBI. The last meeting was held on the 6th of August.
Repo rate is the rate at which the RBI lends money to commercial banks. Whereas, the reverse repo rate is at which the RBI borrows money from banks.
The repo rate is unchanged at 4 % and the reverse repo at 3.3 %.
The RBI Governor said, “The renewed surge of Covid-19 infection in major economies in July has subdued early signs of revival that had appeared in May and June.”
The RBI’s announcement will help the banks give loans to investors and private firms who can invest in industries, boosting the economic situation of India.
The Central Bank is actively strategising monetory policies to limit the economic damage by the pandemic and lockdowns.
The RBI mainly factors in the Consumer Price Index (CPI) and formulate the monetary policy.
In addition, to enhance safety of cheque payments, the RBI is going to introduce a mechanism of Positive Pay for all cheques worth Rs. 50,000 and above.
This will cover approximately 20 % and 80 % of total cheques by volume and value, respectively. Operational guidelines in this regard will be issued separately soon.
Some of the major decision taken during the 24th MSP meeting are:
RBI will set up an innovation hub.
Priority sector lending is also being given to startups, making it easy for them to take loans.
Stressed Micro,Small and Medium Entrepreneur (MSME) borrowers will be eligible for debt restructuring.
RBI would announce additional measures to enhance liquidity support, ease financial stress, improve flow of credit and deepen digital payment system.
Additional special liquidity will be provided to NABARD, National Housing Bank.
Real GDP growth is estimated to be negative for 2020-21.
Repo rate remains unchanged at 4%: RBI.
In June, the CPI based retail inflation pushed to 6.09 %. The higher prices of food items, especially meat, cereals and pulses, pushed the CPI-based retail inflation to 6.09 %.
The inflation rate for July would be announced on the 12th of August, during another press conference.
Stay tuned for further updates.