RBI monetary policy: Key Takeaways –
- The Reserve Bank of Indian (RBI) on Thursday decided to keep the benchmark repo rate unchanged at 4 per cent, already at the lowest since 2000, and reverse repo rate at 3.35 per cent. The accommodative stance continues.
- Additional special liquidity facility of Rs 5,000 crore each will be provided to the National Bank for Agriculture and Rural Development (Nabard) and the National Housing Bank (NHB).
- In its outlook for the rest of the year, the RBI MPC noted that inflation was expected to remain elevated in the second quarter of 2020-21 and ease thereafter in the second half of the year.
- On the economic growth front, Governor Das said, without putting any number to it, that India’s real gross domestic product would contract in the first half of FY21 as well as full financial year.
- RBI governor Shaktikanta Das said that the monetary transmission has also improved considerably. The weighted average lending rate (WALR) on fresh rupee loans sanctioned by banks declined by 162 basis points during February 2019-June 2020, of which 91 basis points transmission was witnessed during March-June 2020.
- Decided to increase the permissible loan to value ratio (LTV) for Gold loans to 90 percent from earlier 75 percent. This relaxation shall be available till March 31, 2021.