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6 Bimonthly Monetary Policy: 06 FEBRUARY 2020 Dear & FD

The monetary policy committee decided to keep the repo rate unchanged at 5.15% due to elevated inflation and slowing growth. Key points: - GDP growth for 2019-20 is estimated at 5%, slowing further to 6% for 2020-21. - Inflation remains elevated in the short-run. - Fixed rate repo windows are being withdrawn and liquidity will be ensured by the RBI without quantitative limits near the policy rate. - Term repos of 1-3 years will be conducted up to Rs. 100,000 crore at the policy rate to ease refinancing in these tenors. - Scheduled banks can deduct incremental retail loans to sectors like auto, housing

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Rishabh Agarwal
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56 views8 pages

6 Bimonthly Monetary Policy: 06 FEBRUARY 2020 Dear & FD

The monetary policy committee decided to keep the repo rate unchanged at 5.15% due to elevated inflation and slowing growth. Key points: - GDP growth for 2019-20 is estimated at 5%, slowing further to 6% for 2020-21. - Inflation remains elevated in the short-run. - Fixed rate repo windows are being withdrawn and liquidity will be ensured by the RBI without quantitative limits near the policy rate. - Term repos of 1-3 years will be conducted up to Rs. 100,000 crore at the policy rate to ease refinancing in these tenors. - Scheduled banks can deduct incremental retail loans to sectors like auto, housing

Uploaded by

Rishabh Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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6TH BIMONTHLY

MONETARY POLICY
06 FEBRUARY 2020

Presentation by : DEAR & FD


5.5

4
6
7
8
8.5

4.5
5
6.5
7.5
1-Jan-14
1-Apr-14
1-Jul-14
1-Oct-14
1-Jan-15
1-Apr-15
1-Jul-15
1-Oct-15
1-Jan-16
1-Apr-16
1-Jul-16
1-Oct-16
1-Jan-17
1-Apr-17
1-Jul-17
1-Oct-17
1-Jan-18
1-Apr-18
Repo Rate(%)

1-Jul-18
Repo and Reverse Repo Rates

1-Oct-18
1-Jan-19
Reverse Repo Rate (%)

1-Apr-19
1-Jul-19
1-Oct-19
1-Jan-20
MSF 5.40%
Repo 5.15%
• No change in
benchmark rates

Reverse Repo 4.90%


Global Slowdown
GDP Growth Rate of India

- 5% for 2019-20

- 6% for 2020-21
Inflation in India

- inflation to remain
elevated in short-run
Statement on Developmental and Regulatory Policies
Policy Changes Impact

Fixed rate repo and four 14-day term repos every Short term liquidity to be cheaper
fortnight are withdrawn. RBI to ensure adequate
provision of liquidity without quantitative
ceilings at or around the policy rate
RBI to conduct term repos of one-year and three- Demand for refinance in these tenors may
year tenors for up to a total amount of get impacted
Rs.1,00,000 crore at the policy repo rate.
Yields in these tenors to remain
southwards, investment in these tenors to
witness portfolio appreciation.

Scheduled commercial banks will be allowed to Bank lending to increase in these sectors
deduct the equivalent of incremental credit which creates scope for refinance. Niche’
disbursed by them as retail loans for companies in these sectors will be targeted.
automobiles, residential housing and loans to
micro, small and medium enterprises (MSMEs)
Statement on Developmental and Regulatory Policies
Policy Changes Impact

Extension of One-time Restructuring Scheme Could benefit certain companies having


for MSME advances stressed assets.
New companies may become eligible for
NABARD refinance

Guidelines on Projects under Implementation This may boost the chances of asset
in Commercial Real Estate sector. resolution of housing and real estate
Proposed Changes in Regulations Applicable to companies where we are having refinance
Housing Finance Companies (HFCs) for Public and investment exposure
Comments

Regional Rural Banks - Permission for Digital Payments


Merchant Acquiring Business
THANK YOU

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