RBI Monetary Policy: What happened at the last meet in August?

The newly-constituted Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will come out with its monetary policy decision on October 9 after three days of deliberations.

There are expectations that the central bank will maintain status quo on the benchmark lending rates in view of the inflation.

In the last monetary policy review on August 6, the RBI chose inflation as its priority. It kept the key lending rates unchanged at 4 percent to help tame inflation and said that the economy was in an extremely weak condition following the COVID-19 pandemic.

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Here are the 10 key points of RBI’s last monetary policy review:

> Status quo: The MPC had voted unanimously to leave the policy repo rate unchanged at 4 percent. It kept the reverse repo rate unchanged at 3.35 percent and maintained accommodative stance.

> Loan restructuring for MSME: MSME borrowers have been allowed restructuring of debt.

> Inflation: The MPC decided to "continue with the accommodative stance of monetary policy as long as necessary to revive growth, mitigate the impact of COVID-19 while ensuring that inflation remains within the target" zone, RBI Governor Shaktikanta Das had said.

> Sombre growth outlook: RBI forecasted a contraction in real GDP growth for April 2020 to March 2021 fiscal. "Real GDP growth in the first half of the year is estimated to remain in the contraction zone. For the year 2020-21 as a whole, real GDP growth is also estimated to be negative," Das had said.

> Resolution framework for COVID-19-related stress: To deal with economic disruptions caused by COVID-19, RBI allowed lenders to implement a resolution plan for corporate loans without change of ownership.

> Increase in permissible loans against gold ornaments and jewellery: The limit of advance against gold ornaments and jewellery was raised from 75 percent to 90 percent. This relaxation shall be available until March 31, 2021.

> Additional liquidity facility for NHB, NABARD: The RBI had said it would provide an additional standing liquidity facility (ASLF) of Rs 5,000 crore to NHB and Rs 5,000 crore to NABARD.

> Creation of innovation hub: The RBI had said that it would set up an Innovation Hub in India to promote innovation across the financial sector by leveraging on technology and create an environment that would facilitate and foster innovation.

> Online dispute resolution for digital payments: The central bank had said that it would require Payment System Operators (PSOs) to introduce Online Dispute Resolution (ODR) Systems in a phased manner.

> Scheme of offline retail payments using cards and mobile devices: In the last monetary policy review, the RBI had proposed to allow a pilot scheme for small value payments in off-line mode with built-in features for safeguarding the interest of users, liability protection, etc.