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    RBI monetary policy: Here are the key highlights from the MPC meeting

    RBI monetary policy: Here are the key highlights from the MPC meeting

    RBI monetary policy: Here are the key highlights from the MPC meeting
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    By CNBC-TV18  IST (Published)

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    The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) cut key repo rate by 35 basis points to 5.40 percent on Wednesday while it retained its stance at 'accommodative'. Here are the key highlights from the meeting

    The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) cut key repo rate by 35 basis points to 5.40 percent on Wednesday while it retained its stance at 'accommodative'.
    One basis point is one-hundredth of a percentage point.
    This is RBI governor Shaktikanta Das' fourth straight rate cut since he took office in December 2018. The MPC has changed its stance twice in the past four policies.
    Here are the key highlight from the third bi-monthly RBI MPC: 
    • The repo rate was cut by 35 basis points (bps) from 5.75 percent to 5.40 percent with immediate effect.
    • The reverse repo rate stands revised at 5.15 percent, and the marginal standing facility (MSF) rate and the bank rate at 5.65 percent.
    • The MPC also decided to maintain 'accommodative' stance on monetary policy, which means rate increase is off the table.
    • The committee also slashed the country's gross domestic product (GDP) growth rate to 6.9 percent from its earlier revised projection of 7 percent. In its June monetary policy, the GDP growth rate projection was revised to 7 percent from 7.2 percent.
    • The RBI said risks for financial year 2019-20 have tilted the GDP growth forecast to the downside. The central bank said the GDP growth rate projection for the first half of current fiscal year stands between 5.8 percent and 6.6 percent as against 6.4 percent and 6.7 percent earlier while that of the second half of the year stands between 7.3 percent and 7.5 percent.
    • Consumer Prince Index (CPI) inflation is projected at 3.1 percent for Q2:2019-20 and 3.5-3.7 percent for H2:2019-20, with risks evenly balanced. CPI inflation for Q1:2020-21 is projected at 3.6 percent.
    • The risk weight for consumer credit, including personal loans, but excluding credit card receivables, has been reduced to 100 percent from 125 percent.
    • Banks’ exposure limit to a single non-banking financial company (NBFC) has been raised from 15 percent to 20 percent of tier-I capital of the bank.
    • Banks have been permitted to on-lend through NBFCs.
    • Bank lending to registered NBFCs for on-lending to agriculture up to Rs 10.0 lakhs, MSME up to Rs 20.0 lakh and housing up to Rs 20.0 lakh can now be classified as priority sector lending.
    • Four members (Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das) voted to reduce the policy repo rate by 35 basis points, while two members (Dr. Chetan Ghate and Dr. Pami Dua) voted to reduce the policy repo rate by 25 basis points.
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