RBI Meeting and Policy Updates

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• Mutual Funds:

Today in the meeting RBI Governor Shaktikanta Das said that by considering all the aspects involving mutual funds we have concluded that mutual funds are now safe and now people can invest in them for better returns.

It was important to conclude that because after the Franklin Mutual Funds crisis everyone had dis-invested from mutual funds because of the negative returns they were offering. And RBI had to provide a package of 50,000 Crores to save those mutual funds.

• RBI Gold Loan Policy:

RBI governor today announced a very relaxing policy considering gold loan. He said that previously the RBI gold loan policy was limited to offer only a 75% amount of loan on your total gold value, but now the RBI gold loan policy is re-tested and they have changed the Loan-to-value Ratio to 90% in gold loans.

This policy is applied

to every Bank and NBFC who provide gold loans. The reason to launch this RBI loan policy was to give relaxation to the middle-class people during the lockdown, as the lockdown is increasing and companies are removing employees from their jobs which is forcing people to take loans on behalf of their assets and gold is one of the most widely used assets for getting loans.

Therefore, they brought this policy in action. This RBI loan policy will be in action from the 6th of Aug to the 31st of March 2021. Now due to this policy people can get more money on their assets like gold in the form of loans.

• Rural Economy:

RBI Governor Shaktikanta Das also stated in the meeting that the Indian Rural Economy is witnessing substantial growth and can see very positive moves in the coming days. He also said that RBI is very positive regarding Rural economic growth. 

• Repo Rate:

The RBI Governor stated that the Repo Rate is not going to change and will be the same as previously at 4.00%. As the SBI and many experts predicted previously that the Repo Rate will not be changed and will be the same.

Similarly, RBI Governor stated that the Reverse Repo Rate will also remain unchanged at 3.35%.

And the Marginal Standing Facility rate (MSF) and the Bank rate will be at 4.25% unchanged.

RBI Governor said that RBI can consider changing the rates in the coming months. 

• GDP Growth:

Shaktikanta Das in the meeting said that the Rural GDP Growth very good, but the overall Indian GDP growth is expected to be in negative. He also in a previous meeting also stated the same that the GDP growth can be negative because the unemployment rate in India is growing hugely which will impact in less sales and less income of the companies which will cause bad economic conditions in the future.

• Inflation:

Shaktikanta Das states that the Inflation rates can be spiked up in the coming quarters till Q2FY21, as after that the economic deterioration will slow down and people will start getting jobs in the companies.

• Restructuring of Loans:

RBI said that the MSMEs who were paying their all EMI's till March 31, 2020 as per the repayment dates and after that because of the lockdown they could not pay the EMI's, these types of MSME's can restructure their Loans applications and apply for a greater time frame to pay the loans.

As this decision is the best decision that will benefit many MSMEs who can hire people and help in the Job development in the country.

• Special Liquidity facility of 10,000 Crores:

He said that an addition in this is they are providing a special liquidity to the National Bank for Agriculture and Rural Development (NABARD) and the National Housing Bank (NGB) will get 5,000 Crores to tackle the liquidity disruptions in the Housing Sector.

Conclusion:

RBI has given every news in a positive way, and this means that the RBI is very cautious about the economic conditions happening in the future. So even these measures will be positive for the economy, but this state that the future economy is going to tackle many unsolvable problems.

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