NEWS

The Monetary Policy Committee (MPC) of the Reserve Bank of India kept key policy rates unchanged

DETAILS

• Repo rate – the rate at which the RBI lends funds to banks —4 per cent
• Reverse repo rate — the rate at which RBI borrows from banks –3.35 per cent
• Bank rate — the rate at which RBI lends short-term funds to banks sans security —4.25 per cent
• Why the decision – Revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward
• Will help maintain the status quo on the prevailing low interest rate regime for some more time
• For borrowers as the environment of affordability will continue

MAHITI FOR PRELIMS

MONETARY POLICY COMMITTEE

• Government-constituted Committee of RBI under the RBI Act, 1934.
• Tasked with framing monetary policy using tools like the repo rate, reverse repo rate, bank rate, cash reserve ratio.
• Six members.
• Government will nominate three members.
• Other three members come from the RBI
• RBI governor is the ex-officio chairperson.
• Members of the MPC will be appointed for four years and shall not be eligible for reappointment.
• The governor does not enjoy a veto power but has a casting vote in case of a tie