RBI takes accommodative stance, leaves key rates unchanged

In anticipation of inflation falling within targeted limit, the Reserve Bank of India (RBI) in its bimonthly policy review continued with its accommodative stance and left the repo rate unchanged at 4% while also keeping the reverse repo Rrte also at 3.35%. The apex bank has taken the accommodative stance to revive the economy which has been badly affected by the COVID-19 crisis.

RBI Governor Shaktikant Das said for the revitalization of Indian economy, the government and the RBI are together seeking to strengthen and nurture policy stimuli as the time has come to break free of COVID-19 fetters.

A series of additional measures announced by the RBI at this policy reviews included following:
1. Targeted Long Term Repo Operations will be expanded which will encourage banks to extend credit support at a lower cost to stressed sectors.
2. Limits for contactless card transactions as well as recurring transactions e-mandates through UPI and cards will be increased from ₹ 2,000 to ₹ 5,000, from January 1, 2021.
3. RRBs will be permitted to access Liquidity Adjustment Facility as well as Marginal Standing Facility of RBI and also the call/notice money market.
4. Credit Default Swap will be reviewed to facilitate the development of the credit derivatives market.
5. Measures announced to promote and develop corporate bond market as well as and derivatives markets in the country.
6. The regime for NBFC sector to be reviewed with the scale-based regulatory approach and a discussion paper on this to be issued.
7. Co-operative and commercial banks will not make any dividend payouts and retain the profits earned during 2019-20 which will help banks conserve capital and create room for further lending.
8. Guidelines on improving the payment channel ecosystem for digital payment with convenience for users added with robust security to be issued soon.
9. A comprehensive framework will be put in place for grievance redressal mechanism in banks and it will include customer complaints disclosures.
10. Additional powers such as the regularisation of direct dispatch cases of shipping documents and in some cases writing off unrealized export bills.
11. RTGS system to be made 24×7 in the next few days to make the payment system more efficient.