The Reserve Bank of India has announced the Sixth Bi-monthly Monetary Policy Review 2016-17 on 8th February 2017. RBI didn’t make any changes to the key policy rates, thus, maintained its status quo.
The decision of keeping the policy rates unchanged was taken by the Monetary Policy Committee (MPC) categorizing the actual macroeconomic situation of the country.
The key policy rates got favour of 6-0 votes by Monetary Policy Committee (MPC) of RBI that made a base of taking the decision of keeping the rates unchanged. It was the third unanimous decision in a row since MPC was first set up in September 2016.
The members of MPC included Dr. Urjit Patel (RBI Governor), R Gandhi (RBI Deputy Governor), Michael Patra (RBI Executive Director), Chetan Ghate (Professor, Indian Statistical Institute), Professor Pami Dua (Director, Delhi School of Economics), and Ravindra H. Dholakia (Professor, Indian Institute of Management, Ahmedabad).
According to MPC, the environment for timely transmission of policy rates to banks’ lending rates will be considerably improved if the following actions could be done: –
The Indian Banking sector’s Non-Performing Assets (NPAs) are resolved more quickly and efficiently.
Recapitalization of the banking sector is accelerated.
The formula for adjustments in the interest rates on small savings schemes to changes in yields on government securities is fully implemented.
Key Policy Rates after Sixth Bi-monthly Policy Review
|1.||Repo Rate||6.25% (unchanged)|
|2.||Reverse Repo Rate||5.75% (unchanged)|
|3.||CRR (Cash Reserve Ratio)||4% (unchanged)|
|4.||Bank Rate||6.75% (unchanged)|
|5.||MSF (Marginal Standing Facility)||6.75% (unchanged)|
|6.||SLR (Statutory Liquidity Ratio)||20.75% (unchanged)|
Read the details of Key Policy Rates - Important Banking Terms!
In the Sixth Bi-monthly Monetary Policy Meeting of RBI, the following predictions were made: –
5 percent in Q4 of 2016-17 in December.
4% to 4.5% in the first half of 2017-18.
4% to 4.5% in the second half of 2017-18.
In the current fiscal – 6.9 percent
In 2017-18 – 7.4 percent
Current Account Deficit
In 2016-17 – 1% of GDP
Cash withdrawal Limit
From 13th March 2017 – No limit on cash withdrawal
From 20th February 2017 – Withdrawal limit from saving accounts will be Rs. 50,000 per week
Enforcement Department to Monitor Bank
RBI will set up a separate Enforcement Department to effectively monitor bank in case they violate regulations.
The process will be starting from 1st April 2017.
Separate Committee on Cyber Security
RBI has also proposed to set up a separate committee on cyber security.
It will review the threats posed in the existing or emerging technology.
It will also study the adoption of various security standards and protocols.
It will look at the interface with stakeholders and suggest appropriate policy interventions to strengthen cyber security and resilience.
In this article, we have wrapped all the important highlights of the sixth bi-monthly policy of RBI. You can also take a look on to the important news and information suggested below: –
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