The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the December policy. The central bank maintained the status quo for the third consecutive policy. Here are the highlights from the RBI governor's statement:

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Key Policy Announcements

Repo rate left unchanged at 4 percent.

MPC maintains an 'accommodative' stance at least during the current FY & into the next year.

All MPC members voted unanimously for a status quo.

Repo rate left unchanged.

On Inflation

CPI inflation projection at 6.8 percent Q3 FY21, and at 5.8 percent for Q4 FY21.

CPI inflation is seen at 5.2 to 4.6 percent in H1 FY22, with risks broadly balanced.

MPC is of the view that inflation is likely to remain elevated, barring transient relief in the winter months.

Monetary policy constrained at the current juncture from using the space available to act in support of growth.

Further efforts necessary to mitigate supply-side driven inflation pressures.

On Growth

Real GDP growth projection for FY21 revised to -7.5 percent from -9.5 percent earlier.

GDP growth is seen at 0.1 percent in Q3 FY21 and 0.7 percent in Q4 FY21.

GDP growth is seen at 6.5-21.9 percent in H1 FY22, with risks broadly balanced.

Signs of recovery far from being broad-based; dependent on sustained policy support.

Recovery in rural demand expected to strengthen further.

Urban demand recovery also gaining momentum.

Positive impulses clouded by a possible rise in infections in some parts of the country.

Private investment still slack and capacity utilization has not fully recovered.

Prospects have brightened with the progress on the vaccines.

Non-Policy Announcements

On-Tap TLTRO – Extension of sectors and synergy with ECLGS 2.0​. Banks can avail funds from RBI under TLRO to invest in sectors under ECLGS 2.0. Furthermore, banks can invest in papers, give loans to stressed sectors covered under ECLGS 2.0.

Regional Rural Banks permitted to access LAF window, call money market.

Commercial & cooperative banks to not make any dividend pay-out from the profits of FY20.

Different categories of NBFCs to be allowed to declare dividend as per a matrix of parameters.

Discussion paper on scale-based regulatory framework for NBFCs by Jan 15, 2021.

Risk-based internal audit to be extended to UCBs, NBFCs.

Harmonization of guidelines on the appointment of statutory auditors for commercial banks, UCBs and NBFCs.

RTGS will soon be made 24X7 in the next few days.

First Published:Dec 4, 2020 12:18 PM IST