RBI Monetary Policy key points: IMPS cap raised from Rs 2 lakh to Rs 5 lakh, repo and reverse rates unchanged

At the end of the three-day bi-monthly review meeting, Reserve Bank Governor Shaktikanta Das-led Monetary Policy Committee (MPC) on Friday maintained status quo on key policy rates and in its future stance to support growth and tackle inflation.

Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the Act. The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.

Here are the major announcements by RBI governor Shaktikanta Das:

• The RBI’s inflation forecast for the current financial year was lowered to 5.3 percent vs 5.7 percent earlier. For the second quarter of the current financial year, it has been lowered to 5.1 percent vs 5.9 percent earlier. Third quarter forecast has been lowered to 4.5 percent. For the last quarter its has been retained at 5.8 percent. For the next financial year’s first quarter, it has been pegged at 5.2 percent.
• The projection for real GDP growth is at 9.5 percent for the ongoing financial year. The RBI governor said the central bank sees Q2FY22 GDP growth at 7.9 percent, Q1FY23 GDP growth at 17.1 percent and Q4FY22 GDP growth at 6.1 percent.
• The MPC maintained status quo on the repo and the reverse repo rate in order to support growth and tackle inflation. It kept both the repo rate unchanged at 4 percent and reverse repo rate at 3.35 percent respectively.
• A new scheme on retail digital payments solutions in the offline mode has been announced.
• The RBI governor kept the Marginal Standing Facility (MSF) static at 4.25 percent. The July-September CPI inflation was “lower than anticipated", he said.
• RBI stops G-SAP bond buys but will continue to conduct open market operations as needed.
• All new payment acceptance infrastructure, including PoS machines and QR codes, to be geo-tagged
• The ceiling for transactions via IMPS has been raised from Rs 2 lakh to Rs 5 lakh
• SLTR auctions for small finance banks will continue beyond the original deadline of October 2021 to December 2021.