Dear Bankersdaily Aspirant,

The Reserve Bank of India, the apex banking institution of all the banks in India have released the 5th Bi Monthly Policy for the Financial year 2017-2018. The RBI’s Monetary Policy committee(MPC) decides the Bi-Monthly Policy.There has been no significant changes in the Bi-Monthly Policy of the RBI this time and it is unchanged when compared to the previous one which was released in the month of October. The Monetary Policy is designed as to maintain the price stability in the economy.

The Monetary Policy Committee of the Reserve Bank of India have decided to keep the REPO RATE under the liquidity adjustment facility (LAF) unchanged at 6% while maintaining  the neutral stance . This decision was taken on the basis of an assessment of the current and evolving macroeconomic situation. The Monetary Policy committee had voted 5:1 for its status quo while maintaining its neutral stance. The Repo Rate is at 6% , Reverse Repo Rate is 5.75%, Marginal Standing Facility is at 6.25%, the bank rate is at 6.25%, the cash reserve ratio (CRR) is at 4% and the statutory liquidity ratio (SRR) is at 19.5 % which is the same as that of the previous Bi Monthly Policy released in the month of October.

Policy Rates :

Policy Rate Previous Current
Repo Rate 6% 6%
Reverse Repo Rate 5.75% 5.75%
Marginal Standing Facility 6.25% 6.25%
Bank Rate 6.25% 6.255
CRR 4% 4%
SLR 19.50% 19.50%

* The Previous in the table mentions the previous Bi-Monthly policy of RBI released in the month of RBI and the CURRENT represents the rates of the present Bi-Monthly policy of RBI for the month December.

You can check the detailed assessment and outlook of the RBI Monetary Policy Committee’s Bi- Monthly Report of December, please click the link below to view it in detail.

  • The Reserve Bank of India (RBI) have proposed the inflation range of 4.2% – 4.6% in the last meeting held in the month of October and now they have revised the inflation projection in the range of 4.3% – 4.7% for the last two quarters of the financial year.
  • One of the assessment stated that the growth of real gross value added (GVA) accelerated sequentially in Q2 of 2017-18, after five consecutive quarters of deceleration. It was powered by a sharp acceleration in industrial activity. Considering thereal GVA (Gross Value added) Projection of the October resolution for the year 2017-2018, the GVA has been retained at 6.7%. This has been retained considering the facts like shortfalls in the production of the Kharif and Rabi sowing pose downside risks to the outlook for Agriculture and Recent increase in the oil prices which may have a negative impact on the GVA Growth and margin of firms. The sectors like Services and Infrastructure will see a demand improvement in the forthcoming days.
  • The other assessment which was considered appropriate was the Committee felt that the assessment is clouded by the still unfolding effects of the withdrawal of specified bank notes (SBNs). The Specified Bank Notes withdrawal could interrupt some part of the industrial activity in the month of November – December due to the wage payments delay and purchase of inputs.(a full assessment on this is awaited). Also decelerated production of cement , fertilizers and electricity reflects the sluggishness in the present economy.
  • Growth in bank deposits have also came down distinctly when compared to the previous months with this November. Food and Fuel Price changes and inflation expectations made the monetary policy to remain the Rates at the same level.

  • Members Of The Monetary Policy Committee :
  • Dr. Chetan Ghate, Professor, Indian Statistical Institute
  • Dr. Pami Dua, Director, Delhi School of Economics
  • Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad
  • Dr. Michael Debabrata Patra, Executive Director (the officer of the Reserve Bank nominated by the Central Board under Section 45ZB(2)(c) of the Reserve Bank of India Act, 1934)
  • Dr. Viral V. Acharya, Deputy Governor in-charge of monetary policy
  • Chaired by Dr. Urjit R. Patel, Governor.

Ravindra H. Dholakia , this time too in the monetary policy placed a dissenting vote.

  • The next meeting of the Monetary Policy Committee is scheduled to happen on 7th and 8th of February, 2017.

You can check the article on the 3rd Bi monthly Policy from the links given below.

You can check the various definitions of the banking terms relating to the Bi Monthly Policy of RBI from the link given below.