Monetary Policy Committee (MPC) has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) from 5.75% to 5.40% with immediate effect.
Reverse repo rate under the LAF stands revised to 5.15%, and the marginal standing facility (MSF) rate and the Bank Rate to 5.65%.
MPC also decided to maintain the accommodative stance of monetary policy.
Medium-term target for consumer price index (CPI) inflation is 4% within a band of +/- 2%, while supporting growth.
Real GDP growth for 2019-20 is revised downwards from 7.0% in the June policy to 6.9% – in the range of 5.8-6.6% for H1:2019-20 and 7.3 - 7.5% for H2 – with risks somewhat tilted to the downside;
GDP growth for Q1:2020-21 is projected at 7.4%
Exposure for NBFCs increased from 15% to 20%. Banks will now be able to give 20% loan to NBFCs from Tier-I Capital. The risk weight of consumer loans has been reduced from 125% to 100%.
All members of the MPC unanimously voted to reduce the policy repo rate and to maintain the accommodative stance of monetary policy.
Four members (Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das) voted to reduce the policy repo rate by 35 basis points, while two members (Dr. Chetan Ghate and Dr. Pami Dua) voted to reduce the policy repo rate by 25 basis points.
The next meeting of the MPC is scheduled during October 1, 3 and 4, 2019.
