RBI Monetary Policy Rate: 7th April 2021

RBI Monetary Policy Rate: 7th April 2021

The Reserve Bank of India (RBI) is entrusted with the duty of conducting monetary policy. Reserve Bank of India (RBI) Governor announces monetary policy on a bi-monthly basis. Monetary policy refers to the policy of the RBI with regard to the use of monetary instruments under its regulation to accomplish the goals specified in the RBI Act. RBI Monetary Policy Rate like CRR, SLR, Repo Rate, etc. keeps changing and updating with every monetary policy framework.
Here in this article, we are providing the current RBI Monetary Policy Rate list.
This RBI Monetary Policy Rate list will be very helpful in the General awareness section in all the upcoming competitive exams like Bank, Insurance, SSC, Railways, etc.

On April 7, 2021, the Monetary Policy Committee of Reserve Bank of India announced the outcome of its bi-monthly monetary policy review.

Current Policy Rate:    Last Update 7th April 2021

Repo Rate 4.%
Reverse Repo Rate  3.35%
Marginal Standing Facility(MSF) Rate 4.25%
Bank Rate 4.25%
Cash reserve Ratio(CRR) 3.5%
Statutory Liquidity Ratio(SLR) 18%

To Know More Important Update

Key Highlights

  • The repo rate has been kept unchanged at 4%.
  • The reverse repo rate has been kept at 3.35%.
  • The real GDP growth for the Fiscal Year 2022 is predicted to be 10.5%.
  • The CPI of 2022 is predicted to be at 5.1%.
  • The MSF rate has been kept unchanged at 4.25%.
  • The Bank rate has been kept unchanged at 4.25%.
  • RBI is to buy Rs 1 lakh crores of G-Sec under the G-Sec Acquisition Programme.
  • The Apex Bank has increased the centre’s Ways and Means Advances by 46%. The current limit is Rs 32,225 crores. It has now been increased to Rs 47,010 crores.
  • Maximum End of Pay balance for payment banks has been doubled to Rs 2 lakhs.
  • Additional liquidity facility of Rs 50,000 crores announced for NABARD, SIDBI and NHB in 2021-22.

CRR – Cash Reserve Ratio – Banks in India are required to hold a certain proportion of their deposits in the form of cash. However Banks don’t hold these as cash with themselves, they deposit such cash(aka currency chests) with Reserve Bank of India , which is considered as equivalent to holding cash with themselves. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio.

SLR – Statutory Liquidity Ratio – Every bank is required to maintain at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). RBI is empowered to increase this ratio up to 40%. An increase in SLR also restricts the bank’s leverage position to pump more money into the economy.

Note-The maximum limit of SLR is 40% and minimum limit of SLR is 0 In India
MSF – Marginal Standing facility It is a special window for banks to borrow from RBI against approved government securities in an emergency situation like an acute cash shortage. MSF rate is higher then Repo rate. 

Bank RateThis is the long term rate(Repo rate is for short term) at which central bank (RBI) lends money to other banks or financial institutions. Bank rate is not used by RBI for monetary management now. It is now same as the MSF rate. 

Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation. 

Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country. In other words, it is the rate at which commercial banks in India park their excess money with Reserve Bank of India usually for a short-term. 

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