06/02/2021
KEY HIGHLIGHTS OF RBI POLICY
Here are key highlights of what the RBI Governor said after the MPC review:
* MPC voted unanimously to leave repo rate,
Reverse repo rate, MSF, Bank rate remain
unchanged.
* Inflation outturns have turned out to be better
than expected as CPI Inflation in the Jan-Mar
quarter at 5.2% and CPI Inflation in H1 of FY22
seen at 5.0-5.2%. Bumper Kharif crop, rising
Rabi sowing are indicative of stable food
inflation.
* Outlook for core inflation is influenced by
cost-pushed pressures.
* Active supply intervention contributed to
lowering of inflation in December.
* Outlook on growth has improved significantly;
GDP growth is projected at 10.5% in 2021-22.
* 2021 is setting the stage for new economic
era in our history.
* Need of the hour is to continue to support
growth as the objective is to return the
economy to a higher growth trajectory.
* Signs of recovery has strengthened further, list
of normalising sectors expanding.
* The policy stance remains accommodative as
long as necessary.
* Electricity demand reflect broader
normalisation of economic activity than in
December.
* Saw renewed confidence in the real estate
sector.
* Vaccination drive to provide impetus for
restoration of contact intensive sectors.
* Speed of daily highway construction is rising.
* Flow of financial resources to commercial
sectors is improving.
* Survey suggests further sequential
improvement in loan demand.
* Budget has provided strong impetus for
revival of health, infra sectors.
* Budget will reinvigorate domestic demand.
Atmanirbhar stimulus given earlier has started
working its way through.
* Projected increase in capex by govt augurs
well for investment demand, improving
credibility of quality of spending.
* Concerted policy action by both centre and
state is critical to ensure that ongoing cost
build up does not accelerate.
* Maintenance of financial stability, orderly
evolution of yield curve was explicitly
regarded as "public good".
* Stance on liquidity management continues to
remain accommodative and in consonance
with policy stance will ensure adequate
liquidity in the system.
* Proactively took steps to insulate domestic
markets from global spillovers.
* CRR normalisation opens space for other
market operations to inject liquidity; to
announces two-phase normalisation of CRR.
* Restoration of CRR to happen in two phases
from March; decided to gradually restore CRR
to 3.5% from March and then 4% from May
22nd.
* Financial stability at the core of RBI's
objective.
* To ensure orderly completion of govt's market
borrowing program for FY22.
* To include NBFCs under TLTRO on-tap scheme
for incremental lending to stressed sectots.
MSF facility to banks will be available till
September.
* To extend dispensation of enhanced
held-to-maturity (HTM) category under SLR to
22%.
* Banks will be allowed to deduct new credit to
MSMEs from their NDTL.
* To defer implementation of last tranche of
capital conservation buffer and
implementation of MSFR by another 6
months.
* To come out with consultation paper to
harmonise regulatory framework in
microfinance space
* To allow retail investors to open gilt accounts
with RBI (BBIIIGGG), to provide retail investors
access to primary and secondary government
securities market.
* To provide retail investors online access to
gilts market via Retail Direct.
* Allowing retail investors together with HTM
relaxation will facilitate smooth completion of
govt's borrowing programme in FY22.
* Going ahead, Indian economy is poised to
move in only one direction, that is upwards.
* In FY22, will undo damage that COVID inflicted
on the economy
