The Reserve Bank of India (RBI) today said that the
monetary policy review has decided to continue with an accommodative
stance of monetary policy to maintain status quo on key policy rates.
This will continue as long as necessary at least through the current
financial year and into next year to revive growth and mitigate the
impact of Covid 19. The repo rate is kept unchanged at 4 percent and the
reverse repo rate at 3.35 percent.
While announcing the policy review the RBI governor Shaktikant Das said
that the GDP growth is projected at 10.5 percent in the Financial Year
2021-22. He said projection of CPI inflation has been revised to 5.2
percent for the fourth quarter of the current financial year. He added
that the year 2020 tested the capabilities and endurance, 2021 is
setting the stage for a new economic era in the course of our history.
Shaktikanta Das said that the normalisation is pickup pace in India as
fears of a second wave of the coronavirus abate. He pointed out that
consumer confidence is reviving and business expectations of
manufacturing, services and infrastructure remain upbeat. The movement
of goods and people and domestic trading activities are growing at a
robust pace.
Later in the day speaking to the media, RBI Governor Shaktikant Das
said the government and the RBI have discussed the idea of a bad bank
and will examine the formal proposal on the ARC once it is made. He was
speaking in the press conference via video conferencing after the
announcement of Sixth Bi-Monthly policy review today. He expressed his
views about the Asset Reconstruction Company proposed by the Centre
during the budget for 2021-22.
He said that the bank is making its own assessment of true state of
NPAs in each bank and expressed confidence of managing the borrowing
program in a non-disruptive manner.
Speaking about the retail participation in government securities he
said that,as part of continuing efforts to increase retail participation
in government securities and to improve ease of access, it has been
decided to move beyond aggregator model and provide retail investors
online access to the government securities market - both primary and
secondary - along with the facility to open their gilt securities
account with the RBI.
He added that direct retail participation in the bond market is a major
structural reform and it is endeavour to make the G-sec market
accessible.
Commenting about the current scenario he said the macroeconomic
situation is constantly evolving and the market has its own way of
interpreting things. He made it clear that he has not spelt out June as
the date on which the accommodative guidance will end and he had only
said the accommodative stance will continue into the next financial
year.
Deputy governor BP Kanungo also gave an explanation about the retail
participation scheme. He said that it is necessary that the investor
base is broadened due to government borrowing size and said that the
bank will come out with details on retail participation in g-sec market
very soon.
RBI governor also assured that the retail direct plan will not harm the
banks and said that with growth in GDP the Indian economy will continue
to grow and the total volume of savings and deposits will expand with
it. He said that the digital currency is a work in progress at the
central bank and the government is looking to launch a state owned
digital currency.
SOURCE ; AIR
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