RBI leaves repo rate unchanged, announces Rs 10,000 cr special fund

Shaktikanta Das

Mumbai:The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 4 per cent, the apex bank’s Governor Shaktikanta Das said today.

Speaking to reporters, he said, “An accommodative stance of the monetary policy will continue as long as necessary to revive growth and mitigate the impact of the pandemic while ensuring that inflation remains within target going forward. RBI is perhaps the only central bank in the world which has set up a special quarantine facility for continuity of critical operations.”

In order to ease the woes of the realty sector and strengthening rural economy, the RBI will also provide Rs 10,000 crore liquidity to NABARD, NHB at repo rate.
Das anounced additional special liquidity facility of Rs 10,000 crore for NABARD and National Housing Bank. He said this additional funding will help NBFCs and housing sector tide over the liquidity crisis.

Since February, the Reserve Bank of India has already reduced the repo rate by a total of 115 basis points.

Das said: “Borrowing costs in the financial markets have dropped lowest in a decade due to abundant liquidity. Commercial papers of NBFCs have softened. NBFCs have access to funding at reasonable costs.”

He added: “Monetary transmission has improved considerably. There was a decline in weighted average lending rate by 162 basis points for banks during February 2019-June 2020. Out of this, 91 basis points transmission was witnessed between March and June 2020.”

The Monetary Policy Committee is expecting inflation to remain elevated in the second quarter and thus, providing an ease in the second half of the fiscal, he said.

 

NT Bureau