A 2 minutes' guide to RBI monetary policy

From liquidity, monetary policy operations to financial inclusion, know about RBI monetary policy

Liquidity and monetary policy operations

* Repo rate kept unchanged at 6.25%

* Policy rate corridor for repo rate reduced from +/- 50 basis points (bps) to +/- 25 bps 

* Reverse repo rate increased by 25 bps to 6% from 5.75%

* Marginal Standing Facility (MSF) rate reduced by 25 bps to 6.5%

* RBI to employ a mix of instruments to ensure liquidity 

* Government examining introduction of Standing Deposit Facility (SDF); this would give greater flexibility to manage liquidity operations

Banking regulation and supervision

* Minimum net owned funds for asset reconstruction companies increased from Rs 2 crore to Rs 100 crore

* Banks allowed to participate in Real Estate Investment Trust (REITs) and Infrastructure Investment Trust (InvITs) 

* Revised Prompt Corrective Action (PCA) framework for banks to be issued by mid-April 2017

Financial markets

* Draft guidelines on simplified hedging facility for forex exposure likely by mid-April

* Towards development of corporate bond market, a draft policy framework for introduction of tri-party repo likely by mid-April

Payment and settlement

* Eleven additional settlement batches for National Electronic Funds Transfer (NEFT) to be introduced from 8.30 am onwards

* Total half-hourly settlement batches to increase to 23

* Current merchant discount rate (MDR) to continue till the issuance of final guidelines

* Final guidelines for prepaid payment instruments (PPIs) to be issued by end-May 

Financial inclusion

* RBI to initiate a pilot project on financial literacy 

* Project to be commissioned in nine states across 80 blocks by non-government organisations in collaboration with the sponsor banks