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RBI's rate hold move correct as growth, inflation, demand remain uncertain: SBI Ecowrap

RBI's Monetary Policy Committee (MPC) after three days of deliberations on Thursday voted unanimously to leave the policy repo rate unchanged at 4 per cent

twitter-logoBusinessToday.In | August 7, 2020 | Updated 18:01 IST
RBI's rate hold move correct as growth, inflation, demand remain uncertain: SBI Ecowrap
Reserve Bank of India

RBI's decision to keep the key lending interest rates unchanged was correct as the trajectory of economic growth, inflation and external demand remains uncertain, the latest SBI Ecowrap report said. The calibrated approach of the central bank is in accordance with changing situations while keeping adequate headroom for the  future, the report added.

"On the regulatory and development policy front the RBI has carefully addressed the concerns emanating from the wider market participants and has taken a bottom up approach to addressing financial stability. For a central bank, regulating and supervising the banks is an ongoing process and not an one-off event. It is akin to one's cleaning and setting one's house in order," it noted.

RBI's Monetary Policy Committee (MPC) after three days of deliberations on Thursday voted unanimously to leave the policy repo rate unchanged at 4 per cent. The MPC also decided to continue with the accommodative stance of monetary policy as long as necessary to revive growth, mitigate the impact of coronavirus while ensuring that inflation remains within the target zone, RBI Governor Shaktikanta Das said. RBI expects the inflation to moderate in the second half of the fiscal.

"The announcement on CRR, mechanism to check and track multiple operating accounts by large borrowers will benefit the industry at large. Harmonising the capital charge for market risk for debt and equity mutual funds is also a good move towards capital conservation given the volatility has increased after COVID-19 pandemic," the report said.

RBI also announced a panel to make recommendations on the financial parameters attached to debt recast. The resolution framework envisages constitution of the expert committee by the RBI to make recommendations on the required financial parameters to be factored in the resolution plans, with sector-specific benchmark ranges for such parameters.Also read: Coronavirus update: This new drug dramatically recovered seriously ill COVID-19 patients

Also read: PM Modi speech: Prime Minister Narendra Modi calls education reforms a "game changer"

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