Urjit Patel Current Affairs - 2020

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RBI keeps key rates unchanged in fifth bi-monthly monetary policy review

The Reserve bank of India (RBI) in its fifth bi-monthly monetary policy review for year 2016-17 has kept key rates unchanged.

Decision in this regard was taken by RBI’s six-member Monetary Policy Committee (MPC) headed by Governor Urjit Patel. This decision was taken on the basis of an assessment of the current and evolving macroeconomic situation. 

Policy Rates

  • Repo rate under the liquidity adjustment facility (LAF): Unchanged at 6.25 percent.
  • Reverse repo rate under the LAF: Unchanged at 5.75 per cent.
  • Marginal standing facility (MSF) and Bank Rate: Unchanged at 6.75 per cent.
  • Reserve Ratios Cash Reserve Ratio (CRR) of scheduled banks: Unchanged at 4.0 per cent of net demand and time liability (NDTL).
  • Statutory Liquidity Ratio (SLR): Unchanged 20.75 per cent.

The policy repo rate where kept unchanged citing global and domestic uncertainties that posed upside risks to inflation. The MPC also has cut Gross Value Added (GVA) growth estimates for the economy in the fiscal year ending March 2017 to 7.1% from 7.6% earlier.

Thus, RBI has retained its “accommodative” monetary policy stance with the objective of achieving consumer price index (CPI) inflation at 5% by Q4 of 2016-17 and the medium-term target of 4% within a band of +/- 2 per cent, while supporting growth.

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RBI cuts repo rate by 25 bps in 4th Bi-monthly Monetary Policy Statement

The Reserve Bank of India (RBI) in its fourth bi-monthly monetary policy review for year 2016-17 has cut the repo rate by 25 basis points to 6.25%.

This monetary policy decision was taken by the newly constituted Monetary Policy Committee (MPC).  This was also Urjit Patel’s maiden monetary policy announcement as RBI Governor.

All the six members of MPC unanimously decided to cut key policy rate with the aim of achieving a midterm inflation target of 4% within a band of plus or minus 2%. With this, RBI moved away from tradition of RBI governor having the final say on monetary policy decisions.

Policy Rates

  • Repo rate under the liquidity adjustment facility (LAF): Reduced by 0.25 basis points to 6.25 percent.
  • Reverse repo rate under the LAF: It was adjusted to 5.75 per cent.
  • Marginal standing facility (MSF) and Bank Rate: It was adjusted to 6.75 per cent.
  • Reserve Ratios Cash Reserve Ratio (CRR) of scheduled banks: Unchanged at 4.0 per cent of net demand and time liability (NDTL).
  • Statutory Liquidity Ratio (SLR):20.75 per cent.

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