Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
prelims Test Series 2019
बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
RBI Cuts SLR by 50 Basis Point; Raises Forex Limit; Key Interest Rates Unchanged
Feb 05, 2015

In the sixth bi-monthly monetary policy review the Reserve Bank left interest rate unchanged saying there was no substantial development on inflation or fiscal fronts to warrant a fresh reduction. This stance follows a surprise rate cut by RBI on January 15 to tackle disinflationary pressure.

  • The RBI left the short-term lending rate or repo rate at 7.75 per cent and the cash balance requirement on the lenders or CRR at 4 per cent.

  • To help exports sector, which of late has been struggling following more headwinds in the global economy, the central bank has decided to replace export credit refinance facility with the provision of system level liquidity with effect from February 7.

  • RBI slashed Statutory Liquidity Ratio (SLR), a percentage of funds banks have to necessarily park with RBI, by 50 basis points to 21.5 per cent.

  • On inflation, the policy document took consolation in the declining trend and noted that even the upturn in December turned out to be muted relative to projections.

  • Despite fiscal deficit touching 99 per cent by November, the RBI was confident that the government will not miss the budgeted 4.1 per cent target.

  • Referring to economic growth, RBI said that though revision in the base year for GDP and calculation methods will mean some revision in GDP growth numbers for 2014-15 as well as in the forecasts, growth expectations should be tempered.

  • Domestic activity is likely to have remained subdued in Q3 of 2014-15, mainly reflecting the shortfall in the Kharif harvest relative to a year ago but agricultural growth is likely to pick up in Q4 with the late improvement in the north-east monsoon and in Rabi sowing.

  • RBI estimated the current account deficit (CAD) for 2014- 15 at 1.3 per cent of the GDP, significantly lower than the earlier projection.

  • The CAD has been comfortably financed by net capital inflows, mainly in the form of buoyant portfolio flows but also supported by foreign direct investment inflows and external commercial borrowings.

  • On payments banks and small finance banks as differentiated banks, RBI said it has received 72 applications for small finance banks and 41 applications for payments banks up to the deadline for submission yesterday.

  • Two External Advisory Committees (EACs) will evaluate the applications received and thereafter make their recommendations to the RBI.

  • The EACs for small finance banks and payments banks will be chaired by Usha Thorat, former RBI Deputy Governor and Nachiket Mor, Director, Central Board of the RBI, respectively.

  • The RBI also increased the eligibility limit for foreign exchange remittances under the Liberalised Remittance Scheme (LRS) to 250,000 dollar per person per year from the earlier 125,000 dollar.

  • On Foreign Portfolio Investors (FPIs), RBI said it has been decided in consultations with the government that all future investments by them in the debt market will be required to be made with a minimum residual maturity of three years.

  • The first bi-monthly monetary policy statement for fiscal year 2015-16 is scheduled on April 7.

Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.