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RBI Policy Meet- Image Source: Indian Express
- Retaining benchmark rates – RBI kept benchmark rates where they were through the last several policy calls. Central Bank kept the repo rate at 4%, showing the central bank’s dovish stance will continue in order to help an economy battling for revival. Reverse repo rate was also kept at 3.35%. The MPC voted unanimously to keep the repo, the reverse repo, and all other rates unchanged.
- Hoping for a bounce-back – The growth projection for FY22 was scaled down to 9.5% in view of the pain inflicted by Covid’s second wave. The stance will continue to be accommodative now as well. Earlier, RBI had pegged its growth forecasts for this financial year at 10.5%. Some economists, however, are of the view that there might not be any change to the forecast, given a recent series of positive news such as a normal monsoon, rising vaccinations, and a comeback of pent-up demand.
- Keeping borrowing costs low – While the latest inflation scenario provides some elbow room to policymakers, we still require support from all sides for the economy to regain momentum.
- Relief for borrowers – An extension to the ongoing loan restructuring program was being sought by banks till 2023-end. Banks were also asking RBI to permit borrowers to have access to higher amounts of working capital loans until the end of Q2. The original deadline for this had expired in March. The RBI will continue operation to ensure smooth liquidity management.
- Doubling loan restructuring – Another important announcement pertained to doubling loan restructuring limits for struggling small companies which were more severely by the second wave from Rs 25 crore to Rs 50 crore. Also, during his address, the governor mentioned that India’s forex reserves may have exceeded a record $600 billion, which makes RBI’s intervention complex.
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