RBI keeps key rates unchanged

The six-member monetary policy committee (MPC) headed by the RBI Governor Urjit Patel kept key lending rate, the repo rate unchanged at 6.25 percent against a widely-anticipated cut of 25 basis points.

RBI also retained the MSF and bank rate at 6.75 percent and reverse repo rate at 5.75 percent.

While the Cash reserve ratio (CRR) or percentage of deposits required to be maintained with the RBI is retained at 4 percent,

The central bank’s monetary policy committee also pared its projection for Gross Value Added (GVA) growth in the fiscal year ending March 2017 to 7.1 per cent, from 7.6 per cent, in the wake of an “unexpected loss of momentum” in the second quarter and on account of the effects of the withdrawal of high-denomination banknotes.

Know More

1. Marginal Standing Facility - is a window for bank to borrow from the Reserve Bank of India in an emergency situation when inter-bank liquidity dries up completely.

2. Repo Rate - is the rate at which Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.

3. Cash Reserve Ratio (CRR) - is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.

4. Reverse Repo Rate - is the rate at which the Reserve Bank of India borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country

5. Gross value added (GVA) - is the measure of the value of goods and services produced in an area, industry or sector of an economy, in economics. In national accounts GVA is output minus intermediate consumption.

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