RBI keeps interest rates unchanged; raises the limit for gold loans
The six-member monetary policy committee (MPC) of the Reserve Bank of India, headed by Governor Shaktikanta Das, on Thursday kept the policy rates after delivering 115 basis points repo rate cuts since March 2020.
It is done to help tame inflation that in recent times had surged past 6 per cent mark, and they noted that the economy is in an extremely weak condition following the pandemic. The current rates valid for next 3 months and the repo rate is4 per cent, and the reverse repo rate stands at 3.35 per cent.
“An accommodative stance of the monetary policy will continue as long as necessary to revive growth and mitigate the impact of the pandemic while ensuring that inflation remains within target going forward. RBI is perhaps the only central bank in the world which has set up a special quarantine facility for continuity of critical operations,” said the Governor.
The Reserve Bank also allowed lenders to restructure corporate and MSME loans as well as raised the limit of loans that can be availed against gold ornaments and jewellery.
The governor also announced Rs 10,000 crore in additional liquidity facility for NBFCs and HFCs, which is being provided at the policy repo rate, which will include Rs 5,000 crore facility via National Housing Bank (NHB)
To lower the stress being faced by smaller non-bank finance companies (NBFCs) and micro-finance institutions, Rs 5,000 crore facility via National Bank for Agriculture and Rural Development (NABARD) is also announced.
Mr Shaktikanta Das said that the stressed MSME borrowers will be made eligible for restructuring their debt under the existing framework, provided their accounts with the concerned lender were classified as standard as on March 1, 2020. This restructuring will have to be implemented by March 31, he said. He added that the RBI has decided to increase the permissible loan to value ratio (LTV) for gold loans to 90 per cent. Currently, loans sanctioned by banks against pledge of gold ornaments and jewellery for non-agricultural purposes could not exceed 75 per cent of the value of gold.