RBI Monetary Policy 2021
Reserve Bank of India (RBI) Unveiled its bi-monthly monetary policy and has kept the interest rates unchanged.
- Monetary policy opened a Rs 15,000-crore liquidity window for contact-intensive sectors such as hotels and tourism.
- On the liquidity front, it announced securities purchases of Rs 40,000 crore in June quarter while Rs 1.2 lakh crore in September under G-SAP 1.0 to revive the growth.
- It kept interest rates unchanged. Repo rate was kept at 4 per cent while reverse repo rate was kept unchanged at 3.35 per cent.
- G-SAP 2.0 will be launched to buy bonds worth Rs 1.2 trillion. Under it, RBI will also buy bonds issued by state governments.
Why report was kept unchanged?
Reports were kept unchanged because, in current situation, policy support from all sides is required to regain momentum of growth and to nurture recovery.
Monetary Policy Committee (MPC)
MPC fixes benchmark interest rate in India. Meetings of MPC are held at least 4 times a year or at least once BIMONTHLY and it publishes its decisions after each meeting.
Members of MPC
MPC has six members- three officials from Reserve Bank of India and three external members who are nominated by Government of India. Governor of the RBI is chairperson ex officio of committee.
What is silent period?
Members of the MPC are required to observe a “silent period” seven days before and after its rate decision to maintain confidentiality.
How decisions are taken?
Decisions of MPC are taken by majority where Governor can put his casting vote in case of tie.
What is G-SAP 1.0
It is Government Security Acquisition Programme 1.0 announced by RBI for orderly evolution of yield curve in Financial Year 2022. Under it, RBI will purchase government bonds of worth Rs 1 trillion. It provides more comfort to bond market and reduces spread between repo rate and ten-year government bond yield. It is similar to an OMO calendar.
Month: Current Affairs - June, 2021
Category: Economy & Banking Current Affairs - 2022
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