The Reserve Bank of India’s Monetary Policy Committee (MPC), on Friday, cut key repo rate by 25 basis points (bps) to 5.15 percent, in its fourth bi-monthly MPC review meeting. Consequently, the reverse repo rate stands at 4.9 percent. The cut, a fifth in a row, was voted by a 5:1 majority.
All members of the MPC voted to reduce the policy repo rate and to continue with the accommodative stance of monetary policy. Dr. Chetan Ghate, Dr. Pami Dua, Dr. Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das voted to reduce the repo rate by 25 basis points. Dr. Ravindra H. Dholakia voted to reduce the repo rate by 40 basis points.
NEFT to be made 24x7: The RBI, while announcing the repo rate decision, also clarified that the NEFT facility will be made available 24x7 on all working days starting December 2019.
Here are the key highlights from the October MPC meeting
GDP outlook revised: Highlighting the slowdown in the economy, the MPC cut the fiscal year 2019-20 (FY20) GDP forecast to 6.1 percent from 6.9 percent. This came in as a surprise for most economists.
Inflation: Citing geopolitical uncertainties and elevated food prices, the RBI revised inflation projection upward to 3.4 percent for Q2FY20, while projections were retained at 3.5-3.7 percent for H2FY20 and 3.6 percent for Q1FY21.
Increased eligibility, lending limits for NBFC-MFI borrowers: The RBI, on Friday, the increased household income limit for borrowers of Non-banking finance company-Microfinance Institutions (NBFC-MFIs) to Rs 1.25 lakh for rural areas and Rs 2 lakh for urban and semi-urban areas.
Earlier, the limits were set at Rs 1 lakh and Rs 1.6 lakh, respectively. Moreover, the lending limit has been increased to Rs 1.25 lakh from Rs 1 lakh per eligible borrower.
RBI | Monetary Policy | MPC | Economy | GDP | Growth
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