RBI cuts policy rates and changes stance to ‘Neutral’

RBI has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5% to 6.25% with immediate effect in its Sixth Bi-Monthly Monetary Policy (2018-19) Statement released today. The global growth scenario, recent fall in crude oil prices and softening inflation numbers have enabled RBI to cut the policy rates and changing of stance. The path of CPI inflation is revised downwards to 2.8% in Q4:2018-19, 3.2%-3.4% in H1 2019-20 and 3.9% in Q3 2019-20, with risk broadly balanced around the central trajectory. On the growth side, GDP growth for 2019-20 is projected at 7.4% - in the range of 7.2-7.4% in H1 and 7.5% in Q3 – with risks evenly balanced. As a major step, RBI has reduced Risk weight for rated exposure on NBFCs-ND-SIs from existing 100% to risk weights based on their respective external ratings, in manner similar to that for corporates. This will enable stronger/well rated NBFCs to raise more funds at competitive price. RBI has also revised definition of bulk deposits to Rs.2.00 crore and above (from the earlier Rs.1 Cr & above) to aid banks to manage the ALM with less dependency on Bulk deposit. RBI has also raised the limit of collateral free agriculture loan from Rs.1 lakh to Rs.1.60 lakhs. This will enhance coverage of small & marginal farmers in formal banking system and will help in growth of agricultural activities and agrarian economy. Overall, the intent of the policy is growth supporting and to alleviate the fear of liquidity deficit from the market. completed 40 days of training. Cmde (Dr) J.M.Jangir, GM (I&A) graced this event as Chief Guest. On behalf of MDL, Shri SDKajawe, GM (Fin), Shri VPMehta, AGM (CSR&I/Head CSR), Shri S SKadam, AGM (HR) and Shri Vikash Kaushik, SO(CSR) attended the event. Shri ArunBhutani, Director - Lok Bharti, Shri Rahul Sharma (META) and other team members were also present on the occasion.