RBI released monetary policy statement for the year 2020-21

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RBI ने वर्ष 2020-21 के लिए मौद्रिक नीति वक्तव्य जारी किया

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The Monetary Policy Committee (MPC) of the Reserve Bank of India has decided to hold bi-monthly monetary policy meetings on May 20, 21 and 22 in the wake of the COVID-19 epidemic. The meeting was earlier scheduled to be held on 03 June 2020 and was to be announced on 05 June 2020, but during the monetary policy meeting, the MPC has analyzed the current and emerging macroeconomic and financial conditions, So as to reduce the policy revival rate, the impact of COVID-19 along with development can be reduced. These decisions of the MPC are necessary to keep target inflation within the target and thereby maintain financial stability.
(भारतीय रिज़र्व बैंक की मौद्रिक नीति समिति (MPC) ने COVID-19 महामारी के मद्देनजर द्वि-मासिक मौद्रिक नीति की बैठक 20, 21 और 22 मई को करने का निर्णय लिया है। यह बैठक पहले 03 जून 2020 को होने वाली थी और जिसकी घोषणा 05 जून 2020 को की जानी थी, परन्तु मौद्रिक नीति की बैठक के दौरान, एमपीसी ने वर्तमान और उभरती व्यापक आर्थिक और वित्तीय स्थितियों का विश्लेषण किया गया है, ताकि नीतिगत पुनर्जीवित दर को कम करने के लिए विकास के साथ-साथ COVID-19 के प्रभाव को भी कम किया जा सके। MPC के इन निर्णयों लक्ष्य मुद्रास्फीति को लक्ष्य के भीतर रखना जरुरी है और जिससे वित्तीय स्थिरता को बनाए रखी सके। )

Major decisions taken in the meeting of Monetary Policy Committee: –

  • Under the liquidity adjustment facility-LAF, the repo rate has been reduced by 40 basis points to 4.00% from 4.40%.
  • The reverse repo rate under LAF has been reduced by 40 basis points to 3.35% from 3.75%.
  • The marginal standing facility-MSF rate and bank rate has been reduced from 4.65% to 4.25%.

What is monetary policy?

Monetary policy is the policy of the Reserve Bank which uses repo rate, reverse repo rate, liquidity adjustment facility and many other monetary instruments to achieve the goals described in the Act. The Reserve Bank of India (RBI) has been mandated to mandatorily conduct monetary policy under the Reserve Bank of India Act, 1934.
(मौद्रिक नीति रिज़र्व बैंक की नीति है जो अधिनियम में वर्णित लक्ष्यों को हासिल करने के लिए रेपो दर, रिवर्स रेपो दर, लिक्विडिटी समायोजन सुविधा जैसे और कई अन्य मौद्रिक साधनों का उपयोग करती है। भारतीय रिज़र्व बैंक (RBI) को भारतीय रिज़र्व बैंक अधिनियम, 1934 के तहत अनिवार्य रूप से मौद्रिक नीति के संचालन की जिम्मेदारी सौपीं गई है।)


Objectives of monetary policy?

The goal of monetary policy in the country is to maintain growth as well as price stability. Price stability is seen as an essential precondition for achieving development goals.
According to the Reserve Bank of India (RBI) Act, 1934 amendment made to the Reserve Bank of India in May 2016, the Government of India as well as flexible inflation targeting has been given. This is done once every five. The Government of India has notified the 4 percent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 in the official gazette. The target has been set as upper tolerance limit of 6 percent and lower tolerance limit of 2 percent.
(देश में मौद्रिक नीति का लक्ष्य विकास के साथ-साथ मूल्य स्थिरता को बनाए रखना है। विकास लक्ष्यों को प्राप्त करने के लिए मूल्य स्थिरता को एक आवश्यक पूर्व शर्त के रूप में देखा जाता है।
भारतीय रिज़र्व बैंक को मई 2016 में किए भारतीय रिज़र्व बैंक (RBI) अधिनियम, 1934 संशोधन के अनुसार भारत सरकार के साथ-साथ लचीली मुद्रास्फीति लक्ष्यीकरण का कार्य भी दिया गया हैं। यह प्रत्येक पाँच में एक बार किया जाता है। भारत सरकार ने आधिकारिक राजपत्र में 5 अगस्त, 2016 से 31 मार्च, 2021 की अवधि के लिए लक्ष्य के रूप में 4 प्रतिशत उपभोक्ता मूल्य सूचकांक (सीपीआई) मुद्रास्फीति को अधिसूचित किया है। लक्ष्य को ऊपरी सहन सीमा 6 प्रतिशत और निचली सहन सीमा 2 प्रतिशत तय की गई है।)

Monetary Policy Framework :-

The Reserve Bank of India Act, as amended by the Reserve Bank of India (RBI) Act, 1934, explicitly provides for a legislative mandate for the Reserve Bank to operationalize the country’s monetary policy framework. The goal of this framework is to determine the policy (repo) rate based on the current and emerging macroeconomic situation and the estimation of the fluctuations of the liquidity position to drive the money market rates around the repo rate.
(भारतीय रिजर्व बैंक (RBI) अधिनियम, 1934 में संशोधित भारतीय रिज़र्व बैंक अधिनियम स्पष्ट रूप से रिज़र्व बैंक के लिए देश के मौद्रिक नीति ढांचे को परिचालित करने के लिए विधायी अधिदेश का प्रावधान करता है। इस ढांचे का लक्ष्य वर्तमान और उभरती समष्टि-आर्थिक स्थिति और मुद्रा बाजार दरों को रेपो दर के आसपास संचालित करने के लिए चलनिधि स्थिति के उतार-चढ़ाव के आकलन के आधार पर नीति (रेपो) दर निर्धारित करना है।)

Monetary Policy Committee Structure?

The Central Government constituted a six-member Monetary Policy Committee (MPC) in September 2016, under Section 45ZB of the amended RBI Act, 1934.

The Monetary Policy Committee is structured as follows:

1. Governor of Reserve Bank of India – Chairman, Shaktikanta Das
2. The Deputy Governor of Reserve Bank of India, in charge of monetary policy – Member, Dr. Michael Devvrat Patra
3. Executive Director of the bank in charge of monetary policy – Dr. Janak Raj
4. Chetan Ghate, Professor, Indian Statistical Institute (ISI) – Member
5. Professor Pami Dua, Director, Delhi School of Economics – Member
6. Dr. Ravindra Dholakia, Professor, Indian Institute of Management, Ahmedabad – Member

Some important instruments of monetary policy:

Many direct and indirect instruments are used in the implementation of monetary policy in the monetary policy of RBI. Some important instruments of monetary policy are as follows:
Repo rate – The fixed rate of interest at which the Reserve Bank provides overnight liquidity to banks under the liquidity adjustment facility (LAF) against the collateral of the government and other approved securities.
Reverse Repo Rate –  The fixed interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, against the collateral of eligible government securities from banks under the liquidity adjustment facility (LAF).
Liquidity Adjustment Facility – LAF includes overnight as well as period repo auctions. The purpose of the term repo is to help develop the inter-bank term money market, which in turn can set market-based benchmarks for the value of loans and deposits, and for this reason the transmission of monetary policy can be improved. . The Reserve Bank also conducts variable interest rate reverse repo auctions, if required under market conditions.
Marginal Standing Facility –  A facility under which scheduled commercial banks can take a punitive rate of interest by reducing the excess amount of overnite currency from the Reserve Bank to their statutory liquidity ratio (SLR) portfolio to a limit. It provides a safety valve to the banking system against unexpected liquidity shocks.
Stable Stance of Reserve Bank of India’s Monetary Policy Statement – 
The accommodative stance is adopted by the RBI’s Monetary Policy Committee to expand the overall money supply to boost the economy when growth slows.
Key Highlights – 
25th Governor of RBI – Shaktikanta Das 
Headquarters – Mumbai
Established – 1 April 1935, Kolkata

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