Third Bi-Monthly Monetary Policy 2014-15 Highlights

By Unknown - Tuesday, September 30, 2014 - No Comments

Hello!! Dear friends I hope you all are preparing well for the IBPS exam. Here am giving you the details of the Third Bi-Monthly Monetary Policy 2014-15 Highlights, The RBI has kept the policy repo rate unchanged and steady for the third time in a row. On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent and keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities. Instead, there will be cut in the portion of deposits that bank must hold in government securities by 50 basis points to increase the money in the banking system. The governor of RBI, Raghuram G Rajan, had released the policy review statement at the RBI on Tuesday. The Guv also hinted that for now there will be no decrease in the loan rates and it can be expected next year only.

Let us have a look at what the Governor of the RBI had to say on different issues which are hot cakes now:

On inflation: The RBI Guv is keen at decreasing the inflation rates. They have estimated the inflation to be at or below 8% by January 2015 and are keen to bring it down further to 6% by January 2016. Though RBI hasn’t altered the rates, Rajan has pointed that if there will be a situation to cut them, will definitely proceed to alter them.

On improving fundamentals: The RBI has pegged the GDP growth rate for the current fiscal at 5.5%, which is in the range of the projected rate 5-6% in April. The governor has also pointed that, there is a significant decrease in the Current Account Deficit (CAD), which was 4.5% of GDP in May, last year to 1.5-2% of GDP today. And have also stated that, they will be revising at the gold imports and exports once to still reduce the CAD. Rajan had also said that the reserves have increased substantially than before and will increase further in the coming future.

HIGHLIGHTS OF THE MONETARY & LIQUIDITY MEASURES:

The policy repo rate under the Liquid Adjustment facility (LAF) is kept unchanged at 8%
Cash Reserve Ratio (CRR) of the scheduled banks is kept unchanged at 4% of the net demands and time liabilities
No change to provide liquidity under overnight repos at 0.25% of bank-wise NDTL and liquidity under 7-day and 14-day of up to 0.75% of NDTL of the banking system
Reduce the statutory Liquidity Ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5% to 22% of their NDTL with effect from the fortnight beginning August 9, 2014

BANK RATE	9%
Repo Rate	8%
Reverse Repo Rate	7%
Cash Reserve Ratio (CRR)	4%
Statutory Liquidity Ratio (SLR)	22% (from August 9^th)
Marginal Standing Facility (MSF)	9%