RBI has continued with its “accommodative” stance to support economic growth.
New Delhi: Reserve Bank of India (RBI) on Thursday kept the benchmark lending interest (repo) rate unchanged at 4 per cent and continued with its “accommodative” stance to support economic growth.
The monetary policy committee held reverse repo rate, or the key borrowing rate was also kept unchanged at 3.35 per cent.
Here are key things to know about RBI’s development and regulatory policies:
* Extension of term liquidity facility to emergency health services: In May last year, RBI had announced an on-tap liquidity window of Rs 50,000 crore at the repo rate with tenors of up to three years to boost the provision of immediate liquidity for ramping up Covid-19 related healthcare infrastructure and services in the country. The central bank has now proposed to extend the window up to June 30, 2022, from March 31, 2022, as announced earlier.
* Extension of liquidity window for contact-intensive sectors: In June 2021, the Reserve Bank had decided to open a separate liquidity window of Rs 15,000 crore at the repo rate with tenors of up to three years available till March 31, 2022, for certain contact-intensive sectors. This window has now been proposed to extend up to June 30, 2022.
* Voluntary Retention Route: VRR for investment in government and corporate debt securities by foreign portfolio investors (FPIs) was introduced in March 2019 with a view to facilitating stable investments in debt instruments. An investment limit of Rs 1,50,000 crore was set for investments under the VRR. Given the positive response to the VRR, RBI has proposed to increase the investment limit by Rs 1,00,000 crore to Rs 2,50,000 crore with effect from April 1, 2022.
* Review of Credit Default Swaps (CDS) guidelines: Guidelines were last issued in January 2013. In December 2020, it was announced that these norms would be reviewed. Accordingly, draft guidelines were issued on February 16, 2021, for public consultation. “Taking into account the feedback received, the final directions are being issued today,” the central bank said.
* Dealing in offshore foreign currency: “It has been decided to allow banks in India to undertake transactions in the offshore Foreign Currency Settled Overnight Indexed wap (FCS-OIS) market with non-residents and other market makers. Banks may participate through their branches in India, their foreign branches or through their IFSC banking units,” RBI stated.
* Increase of cap under e-RUPI: e-RUPI runs on the UPI platform and currently has a cap of Rs 10,000 per voucher. The vouchers are presently being used largely for Covid-19 vaccination purposes. The Reserve Bank has proposed to increase the cap on the amount to Rs 1,00,000 per voucher.
* NACH mandate limit for TReDS settlements: Trade Receivables Discounting System (TReDS) facilitates discounting/financing of receivables of micro, small and medium enterprises (MSMEs). TReDS settlements are carried out through mandates in the National Automated Clearing House (NACH) system. At present, the amount is capped at Rs 1 crore. RBI has now proposed to increase the NACH mandate limit to Rs 3 crore for TReDS settlements.
* IT outsourcing, governance, risk, controls and assurance practices: “The financial system is seeing extensive leveraging and outsourcing of critical IT services by Regulated Entities to get easier access to newer technologies through financial technology players to improve efficiencies,” RBI said. The central bank has proposed to issue guidelines for IT outsourcing, managing concentration risk, periodic risk assessment and outsourcing to foreign service providers.