Five things to watch out for in RBI ‘s monetary policy announcement

After planning carefully for three days RBI is finally  all set to announce the policy decision of the Monetary policy. On Thursday Reserve Bank of India Governor Shaktikanta Das to announce the policy at around 11:45 AM amid COVID-19. Hence the bankers and economists are keeping eye on it.

Indian rupee banknote

 According to an online report the policies may include-

Growth & inflation outlook

Rate Action

Credit growth & rate transmission

Unconventional measures

Restructuring package

This time Monetary policy committee completed its four year cycle since 29 September 2016. outcome of an online survey shows six out of ten bankers polled expect RBI to keep policy repo rate on hold at 4%. while the rest expect a RBI cut repo rate of 25 basis points.

On Tuesday finance minister commented that India’s economic recovery to remain “fragile” because  of    COVID-19 and lockdowns. Simultaneously The surprise meeting held by MPC in June, has worsened the growth outlook and inflationary pressures. In the second half of the fiscal year economists are expecting inflation to fall to 4.5%.

In the beginning of February repo reduction was 115 bps (basis points). Even banks already transmitted 72 bps to the customers on fresh loans in India. Also the large banks transmitted as much as 85 basis points. Whereas, non-food credit growth on a year-on-year basis slowed to 6.7% in June as compared to 6.5% in May and also 7.2% in April.

Restructured packages is also expected from RBI. Amid COVID-19 many sectors are under pressure. the restructured packages is expecting special focus on certain sectors affected by the pandemic badly. RBI is requested to allow a one-time recast of stressed assets in the wake of the covid-19 pandemic too.

 

 

 

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