{"id":4389,"date":"2020-10-10T23:20:02","date_gmt":"2020-10-10T17:50:02","guid":{"rendered":"http:\/\/yourcareerheights.com\/?p=4389"},"modified":"2020-10-14T16:44:21","modified_gmt":"2020-10-14T11:14:21","slug":"rbis-monetary-policy-statement-2020-21-resolution-of-the-monetary-policy-committee-mpc-october-7-9-2020-key-takeaways-and-highlights","status":"publish","type":"post","link":"https:\/\/yourcareerheights.com\/?p=4389","title":{"rendered":"RBI’s Monetary Policy Statement, 2020-21- Resolution of the Monetary Policy Committee (MPC) October 7-9, 2020; Key Takeaways and Highlights"},"content":{"rendered":"
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The newly appointed Monetary Policy Committee (MPC) with Dr. Ashima Goyal, Professor Jayanth R. Varma and Dr. Shashanka Bhide<\/em><\/strong> as external members met on 7th, 8th and 9th October, 2020 in its first meeting and the 25th under the monetary policy framework that was instituted in June 2016.\u00a0 The meeting of the six-member panel, earlier scheduled for September 29-October 1, was rescheduled after appointment of independent members was delayed.<\/h3>\n

\"\"<\/a>The MPC evaluated domestic and global macroeconomic and financial conditions and voted unanimously
\n- to leave the policy repo rate unchanged at 4 per cent.
\n- It also decided to continue with the accommodative stance of monetary policy as long as necessary \u2013 at least during the current financial year and into the next year \u2013 to revive growth on a durable basis and mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward.
\n<\/strong>-The Marginal Standing Facility (MSF) rate and the Bank rate remain unchanged at 4.25 per cent.
\n-The reverse repo rate stands unchanged at 3.35 per cent.<\/strong><\/p>\n

These decisions were in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +\/- 2 per cent, while supporting growth.<\/strong><\/p>\n

Here are the 10 Key Takeaways from the Monetary Policy:<\/strong><\/h4>\n
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  1. MPC unanimously kept the rates unchanged.<\/span> Rates kept unchanged as inflation has remained above 6% . Borrowers hoping for EMI's cooling off will have to wait.<\/li>\n
  2. While COVID19 remains a threat the economy is showing signs of improvement.\u00a0<\/span> Expect the economy to contract to 9.5% in FY 21. GDP is \"\"<\/a>estimated to contract 9.8%in Q2 FY 21. GDP may breakout of contraction and ener positive zone by Q4 of FY 21. Phase of deep contraction is behind us and silver linings are visible, said the RBI Governor. India Stands poised to shrug off the deadly virus and restart its tryst with Pre-Covid Growth trajectory.<\/li>\n
  3. Retail Inflation will remain elevated in September and ease closer to target by Q3 & Q4 FY 21.\u00a0<\/span>Aggregate demand remains subdued.<\/li>\n
  4. RBI will conduct Special and outright OMO &\u00a0 will double weekly OMO purchases to Rs 20000 crores.<\/span><\/li>\n
  5. RBI will introduce ON-TAP TLTRO for Banks toborrow upto Rs. 1 Lakh Crore at floating rates.\u00a0<\/span>This move is expected o give some impetus to credit growth.<\/li>\n
  6. RBI assured that the borrowing programme of the centre and states for the rest of 2020-21 will be completed in a non-disruptive manner,\u00a0<\/span> WMA limit of Central Govt. is kept at Rs. 1.25 lakh Cr.<\/li>\n
  7. RBI extended the dispensation of the enhanced HTM limit of 22% upto March 31, 2022.<\/span><\/li>\n
  8. RBI will allow Banks to increase exposure to Retail, Small Borrower ,which mainly consists of individuals and small businesses (i.e. with turnover of upto \u20b950 crore), to Rs.7.5 Cr. and will rationalise risk weights for all new housing loans until March 31,2022.<\/span><\/li>\n
  9. In 2018 RBI put in place a framework for Co-origination of loans by Banks and NBFC for lending to priority sector. RBI has now decided to extend the scheme to all NBFC's including HFC's.<\/span> This will allow greater operational flexibility to lender.<\/li>\n
  10. RBI Governor said 'Relative to pre-covid levels several high frequency indicators are pointing to increasing of contractions in various sectors.<\/span> By all indications, the deep contractions of Q1 are behind us.\"<\/span><\/li>\n<\/ol>\n

    Highlights of RBI's monetary policy statement<\/strong><\/h4>\n

    Following are the highlights of RBI Governor Shaktikanta Das' statement and resolution of the Monetary Policy Committee (MPC):<\/strong><\/p>\n