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HOMEPAGE ( ECONOMY

ECONOMY

RBI Monetary Policy

2022: key rates
unchanged

The six-member Monetary Policy

Committee (MPC) voted unanimously
to keep the repo rate unchanged at 4
per cent. MPC committee keeps the
reverse repo rate unchanged at 3.35
per cent as Russia’s invasion of Ukraine
added to a rise in inflation. The Reserve
Bank of India’s Monetary Policy
Committee headed by Reserve Bank
of India (RBI) Governor Shaktikanta
Das kept the repo rate unchanged for
the 11th consecutive time. The repo
rate or the short-term lending rate
was the last cut on May 22, 2020. Since
then, the rate remains at a historic low
of 4 per cent.

Buy Prime Test Series for all Banking,

SSC, Insurance & other exams

The Marginal Standing Facility (MSF)

rate and bank rates remain
unchanged:

Policy Repo Rate: 4.00%

Reverse Repo Rate: 3.35%
Marginal Standing Facility Rate:
4.25%
Bank Rate: 4.25%
CRR: 4%
SLR: 18.00%

Key Points:

The GDP growth forecast has been

lowered to 7.2 per cent, owing to
inflationary pressures due to the
ongoing Russia Ukraine War. Earlier,
the central bank had kept the GDP
growth rate at 7.8 per cent.
RBI announced that now people can
withdraw money from ATMs without
a card in all banks across the nation.
This has been done to give a push to
Digital India.
Net worth requirement for Bharat
Bill Payments System Operating
Units lowered from Rs 100 crore to
Rs 25 crore.
Rationalisation of risk weights for
individual housing loans to be
extended till March 31, 2023.
RBI sees the Current account deficit
at sustainable levels and forex
reserves at $606.5 billion.
Inflation is now projected at 5.7% in
2022-23 with Q1 at 6.3%, Q2 at 5%, Q3
at 5.4% and Q4 at 5.1%.
India’s 10-year bond yield rises to 7%,
the highest since 2019.

The composition of the Monetary

Policy Committee is as follows:

Governor of the Reserve Bank of

India – Chairperson, ex officio: Shri
Shaktikanta Das.
Deputy Governor of the Reserve
Bank of India, in charge of Monetary
Policy– Member, ex officio: Dr
Michael Debabrata Patra.
One officer of the Reserve Bank of
India to be nominated by the
Central Board – Member, ex
officio: Dr Mridul K. Saggar.
A professor at the Mumbai-based
Indira Gandhi Institute of
Developmental Research: Prof.
Ashima Goyal.
A professor of finance at the Indian
Institute of Management in
Ahmedabad: Prof. Jayanth R
Varma.
An agricultural economist and a
senior adviser with the National
Council of Applied Economic
Research in New Delhi: Dr
Shashanka Bhide.

Some important instruments of

Monetary Policy:

The RBI’s Monetary Policy has several

direct and indirect instruments which
are used for implementing the
monetary policy. Some important
instruments of Monetary Policy are as
follows:

Repo Rate: It is the (fixed) interest rate

at which banks can borrow overnight
liquidity from the Reserve Bank of India
against the collateral of government
and other approved securities under
the liquidity adjustment facility (LAF).

Reverse Repo Rate: It is the (fixed)

interest rate at which the Reserve Bank
of India can absorb liquidity from
banks on an overnight basis, against
the collateral of eligible government
securities under the LAF.

Liquidity Adjustment Facility

(LAF): The LAF has overnight as well as
term repo auctions under it. The term
repo helps in the development of the
inter-bank term money market. This
market sets the benchmarks for the
pricing of loans and deposits. This
helps in improving the transmission of
monetary policy. As per the evolving
market conditions, the Reserve Bank of
India also conducts variable interest
rate reverse repo auctions.

Marginal Standing Facility (MSF): MSF

is a provision that enables the
scheduled commercial banks to
borrow an additional amount of
overnight money from the Reserve
Bank of India. Bank can do this by
dipping into their Statutory Liquidity
Ratio (SLR) portfolio up to a limit at a
penal rate of interest. This helps the
banks to sustain the unanticipated
liquidity shocks faced by them.

Important takeaways for all

competitive exams:

RBI 25th Governor: Shaktikanta Das;

Headquarters: Mumbai; Founded: 1
April 1935, Kolkata.

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Sumit Arora

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Monetary Policy 2022

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