Monetary Policy Review by Reserve Bank (RBI)

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Monetary Policy Review by Reserve Bank (RBI)

Recently the monetary policy review has been released by the Reserve Bank of India (RBI).

The six-member Monetary Policy Committee (MPC) headed by the RBI Governor has not made any change in the policy rates. The committee has kept the repo rate at 4% and the reverse repo rate at 3.35%.

Major Decisions:

Suspension of buying secondary market bonds under the Government Securities Acquisition Program (G-SAP): The objective is to remove excess liquidity from the system. The Government Securities Acquisition Program (G-SAP) is a dedicated liquidity mechanism. Through this, RBI buys government securities (sovereign papers) to inject cash into the banking system.

Transfer of liquidity from Fixed Rate Reverse Repo to Auctions: It is proposed to conduct a 14-day Variable Rate Reverse Repo: Auction on fortnightly basis, from the current Rs 4 lakh crore to Rs 6 lakh crore by December, in a phased manner.

28-day VRRR auctions have been started. Also, these auctions will continue on a need-based basis to optimally handle liquidity operations.

Immediate Payment Service (IMPS) limit raised from Rs 2 lakh to Rs 5 lakh:

This will encourage digital transactions. IMPS provides 24X7 instant domestic fund transfer facility. Also, internet banking is accessible through various channels like mobile banking apps, bank branches, ATMs, SMS and Interactive Voice Response System (IVRS).

It is managed by the National Payments Corporation of India (NPCI).

Internal Ombudsman Scheme for Non-Banking Financial Companies (NBFCs): RBI will launch Internal Ombudsman Scheme for Non-Banking Financial Companies (NBFCs) to simplify the grievance redressal mechanism.

The Internal Ombudsman in NBFCS will inquire into customer complaints relating to deficiencies in services which have been rejected in whole or in part by the NBFCS.

Source – The Hindu

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