The Reserve Bank of India (also Known as the Central Bank of India or Bankers’s Bank) has released the Second bi-monthly Policy Statement for the current fiscal year 2019-20.
Based on the assessment of the Monetary Policy Committee of Reserve Bank of India, the second Bi-Monthly Policy was announced by RBI on 6th June 2019.
Monetary Policy Committee of RBI consists of six members headed by Shaktikanta Das, Governor of RBI. All members of the Committee have decided to reduce the Repo Rate by 25 basis point and change the stance of the monetary policy from neutral to accommodative.
Key Changes: Repo Rate, Reverse Repo Rate Kept Unchanged
Based on an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) decided the following changes:
Repo Rate reduced to 5.75 % for the third time in a row.
Reverse Repo Rate remains unaltered at 5.50 %.
Statutory Liquidity Ratio faced a cut and adjusted at 19.5 %.
Marginal Standing Facility (MSF) rate and the Bank Rate stands at 6.0 %.
To make it easier for government jobs aspirants, we have sum up all the important rates in the tabular form. Check it here:
Know more about RBI Governors: A complete list of the past and present governors [UPDATED]
Key Rates after Second Bi-Monthly Policy 2019-20 |
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| S. No. | Instruments | Current Rates |
| 1. | Repo Rate | 5.75% (Reduced) |
| 2. | Reverse Repo Rate | 5.5% (Reduced) |
| 3. | Cash Reserve Ratio (CRR) | 4% (Unchanged) |
| 4. | Bank Rate | 6.00% |
| 5. | Marginal Standing Facility (MSF) | 6.00% |
| 6. | Statuary Liquidity Ratio (SLR) | 19.50% |
Read the details of Key Policy Rates - Important Banking Terms!
Key Highlights of the Second Bi-Monthly Policy
Here we have listed the highlights of the second bi-monthly monetary policy for 2019-20 as announced by the RBI:
The Monetary Policy Committee (MPC) is held for three days for the first time which is usually held for two days.
It is the third cut in a row to reduce the repo rate. All the members of MPC have voted for the cut in the repo rate.
RBI has changed the monetary policy stance from neutral to accommodative.
GDP growth forecast has been cut down to 7% from 7.2% for the Financial year 2020.
Retail inflation forecast raised to 3-3.1 % for (Apr-Sept) and 3.4-3.7 % in the second half (Oct-Mar) of FY 2019-20.
Inflation trajectory has been forecasted from monsoon uncertainties, an unseasonal spike in vegetable prices, crude oil prices, financial market volatility and fiscal scenario.
The RBI has decided to promote the digital transaction and waived off the charges on RTGS and NEFT transactions.
All the decisions of monetary policy have been taken to achieve the objective of a medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.
Due to the third rate cut in repo rate of Reserved banks, the car and home buyers are expecting cheaper loans from banks.
The Monetary Policy Committee comprise of Shaktikanta Das (RBI Governor) and members including Chetan Ghate, Pami Dua, Ravindra Dholakia, Michael Debabrata Patra, Viral Acharya.
| To be Noted |
| The minutes of the MPC’s meeting will be published on 20th June 2019. The next meeting of the MPC is scheduled on 5 to 7 August 2019.
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Suggested Reads:
Highlights of RBI’s first Bi-Monthly Monetary Policy Review 2019-20
RBI’s Sixth Bi-monthly Monetary Policy Review, Key Rates Kept Unchanged
Union Budget 2019-20 Highlights – Impact, Reviews & Judgement
In this article, we have summed up all the important highlights of RBI Second Bi-monthly Policy for the 2019-20 fiscal year.
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