RBI’s Third Monetary Policy for the year: Important points for Bank Exams

Aug 24, 2017 12:35 IST

RBI’s Third Monetary Policy : Important points
RBI’s Third Monetary Policy : Important points

The six-member Monetary Policy Committee (MPC) led by the governor of Reserve Bank of India, Urjit Patel released monetary policy on 2nd August.  This is RBI’s third monetary policy for the financial year 2017-18. The second monetary policy was released in the month of June.  Here we are presenting some highlights of bi-monetary policy which is important for every exam. Banking aspirants must go through the below points and strengthen their preparation.

What is Monetary Policy Committee (MPC)?

Monetary Policy Committee is a committee of Reserve bank of India.  The committee is headed by Governor of the RBI. The committee is responsible for making monetary policy and fixing other important benchmark rates. The committee has six members the RBI Governor, the RBI Deputy Governor in charge of monetary policy, one official nominated by the RBI Board and the remaining three members would represent the Government of India.

Highlights:

Here are the major highlights of RBI’s monetary policy for August 2017.

  • The repo rate, at which commercial banks borrow from the RBI, has been cut to 6 %, a six and half year low. Earlier it was 6.25%.
  • The reverse repo rate, at which banks lend to the central bank, revised to 5.75%. Earlier it was 6%.
  • The cash reserve ratio (CRR), the ratio of deposits which banks have to keep with RBI, unchanged at 4%.
  • The statutory liquidity ratio (SLR), the reserve requirement that the commercial banks in India require to maintain in the form of gold, government securities etc., before providing credit to the customers, has been cut to 20 %. Earlier it was 20.50 %.
  • The Marginal Standing Facility (MSF) revised to 6.25 %.  Earlier it was 6.5 %.
  • Bank rate is also adjusted to 6.25 %.
  • RBI kept its medium term consumer inflation target at 4%.
  • RBI projected the Gross Value Added (GVA) growth at 7.4 % for the financial year 2017-18 and 8.1 % for the financial 2018-19.

The fourth bi monthly policy will be released in the month of October.

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