RBI keeps Repo Rate Unchanged at 4%

Published: August 6, 2020

The Monetary Policy Committee of the Reserve Bank of India has decided to keep the Repo Rate unchanged during the bi-monthly policy review of the apex bank. The MPC is headed by Shaktikanta Das, the Governor of the RBI. The apex bank has already reduced the repo rate by 115 basis points since March this year.

The Current Policy Rates after this Meeting

The Repo Rate stays unchanged at 4% after this decision whereas the reverse repo rate is at 3.35%. The Marginal Standing Facility rate stands at 4.25% and the Bank Rate is also the same. On the other hand regarding the reserve rations, the cash reserve ratio is 3% whereas the statutory liquidity ratio is 18% as per the central bank.

Other Announcements by the RBI

RBI has plans to allow lenders to restructure certain loans also. A new resolution window would be opened for corporate and individual borrowers to ease the COVID 19 impact on the banking and financial sector of the country. RBI has also formed an expert committee in this regard that will recommend the steps to be taken to the RBI. Additional liquidity of Rs 10000 crores will be made available for the NBFCs and HFCs. The NABARD will also provide with Rs 5000 crores to the small NBFCs and microfinance institutions.

Significance

It was expected that there would be a rate cut by the central bank but the central bank kept it unchanged amidst rising inflation in the economy. The Consumer Price Index has not eased recently and also due to the COVID 19 pandemic the economy is yet to show any sign of recovery.

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