Monetary policies of India since 1991:
• Reduction in Statutory liquidity ratio to 25% and Cash reserve ratio to
3-5%.
• Interest rate to be determined by free play of market forces of demand
and supply,
• Developing 3-4 big banks including SBI should be developed as
international banks.
• 8-10 Banks having nationwide presence should concentrate on national
and universal banking services.
• Establishment of Asset reconstruction fund, to recover bad debts.
• To maintain capital adequacy ratio at 9%. Capital adequacy ratio
relates to capital funds/risk weighted assets.
• Monetary Policy (2017-2018):
• Key policy rate kept unchanged at 6 percent.
• Reverse repo rate unchanged at 5.75 percent.
• Cuts economic growth forecast to 6.7 percent from 7.3 percent for
FY'18.
• Projects inflation at 4.2-4.6 percent in the second half.
• GST implementation rendered prospects for the manufacturing sector
uncertain in the short term.
• Focus on keeping headline inflation close to 4 percent on a durable
basis.
• Recent structural reforms improving business environment,
transparency and increasing formalisation of the economy.
• Suggests concerted drive to restart stalled investment projects,
enhance ease of doing business, including amplification of the GST to
boost growth.
• Suggests rationalisation of "excessively high" stamp duties charged by
states, faster rollout of affordable housing programme.
• Government, RBI working to resolve large NPAs and Recapitalise public
sector banks.
Monetary Policy 2019-2020
Repo rate and reverse repo rate: The repo rate has been cut by
25 bps to 5.15 percent. The reverse repo rate has been cut by 4.9
percent. The bank rate continues to stand at 5.4 percent.
The MPC will continue with its accommodative stance, which it
had adopted during the second bi-monthly policy 2019-20,
departing from its earlier neutral stance. The accommodative stance
will remain as long as necessary to revive growth while ensuring
inflation remains within target.
GDP growth forecast: The GDP growth forecast has been cut from
6.9 percent to 6.1 percent for the ongoing fiscal year 2019-20.
CPI: The Consumer price inflation (CPI) forecast has been retained
for the second half of the fiscal year 2019-20 at 3.5-4 percent.
Weak rural and urban demand: The MPC noted that the slump in
real GDP growth in Q2 was followed by weaker demand. The
committee highlighted that the government has announced several
measures in the last two months to revive demand. Overall, the RBI
Governor Shaktikanta Das stated that the global economy has lost
momentum.
Inflation: Households expect inflation to rise by 40 basis points
over a 3-month ahead horizon and 20 basis points over a one-year
ahead horizon.
Agriculture: The RBI said that agriculture in India is well-positioned
to lead the recovery in domestic demand. Vegetable prices,
however, may continue to remain elevated in the coming months
but are likely to moderate as winter supplies enter the market.
Surplus Liquidity: The RBI noted that the liquidity remained in
surplus during August and September despite the expansion in the
currency in circulation.
Monetary Policy 2022-2023
Repo Rate 5.90%
Reverse Repo 3.35%
CRR Rate 4.50%
Bank Rate 6.15%
SLR Rate 18% assets.
Benchmark interest rate hiked by 50 basis points to 3-year high at
5.90 per cent.
Economic growth projection for FY23 cut to 7 pc from 7.2 pc
estimated in August.
GDP expected to grow at 6.3 pc in September quarter, 4.6 pc each
in December and March quarters.
Inflation projection retained at 6.7 pc for ongoing fiscal year (FY23)
Inflation to remain above upper tolerance limit of 6 pc till December.
Average crude oil price for Indian basket expected at USD 100 per
barrel.
RBI to remain focused on withdrawal of accommodative monetary
policy stance to check prices.
RBI says rupee movement orderly against US dollar; depreciated
only 7.4 pc this year till September 28.
RBI does not have a fixed exchange rate for rupee; intervenes in
market to curb excessive volatility.
Forex reserve down 67 pc at USD 537.5 billion as of September 23
this year.
The central bank confident of financing external sector deficit.
World in midst of third major shock from aggressive monetary
tightening by central banks.
Indian economy resilient Merchandise exports affected due to
external factors, private consumption picking up.
Recent correction in global crude oil prices if sustained may provide
relief from inflation.
Bank credit has grown at accelerated pace of 16.2 pc.
Monetary Policy 2023-2024
Reserve Bank of India (RBI) has retained key policy repo rate
retained at 6.5 per cent. This is the third meeting on the trot that
the MPC decided to maintain the status quo on the repo rate.
RBI has maintained that the focus would be on withdrawal of
accommodative policy stance to ensure that inflation progressively
aligns with target, while supporting growth
It has retained GDP growth projection for FY24 at 6.5 per cent
RBI has marginally revised inflation forecast to 5.4 per cent.
According to the central bank, spike in vegetable prices, led by
tomatoes, may exert sizeable upside pressures on near-term
inflation trajectory
RBI will take steps to ensure greater transparency in interest rate
reset of EMI-based floating interest loans. The borrowers to get
options of switching to fixed rate loans or foreclosure of loans
The Reserve Bank is planning to artificial intelligence (AI) in UPI
payments. Near Field Communication (NFC) technology will be
deployed in offline payments via in UPI-Lite
RBI proposes to enhance transactions limits for small value digital
payments to ₹500 from ₹200 in UPI Lite
To absorb surplus liquidity generated by various factors, including
return of ₹2000 notes to the banking system, RBI has asked banks
to maintain an incremental Cash Reserve Ratio (ICRR) of 10 per cent
on the increase in their deposits between May 19 and July 28.
RBI Governor Shaktikanta Das has announced that the cash reserve
ratio (CRR) remains unchanged at 4.5 per cent
According to RBI projections, current account deficit to remain
eminently manageable during FY24
Next meeting of the RBI rate setting panel (MPC) will be held
October 4-6
