RBI's MPC keeps key lending rates unchanged; maintains accommodative stance

The Reserve Bank of India on Wednesday announced key lending rates while keeping interest rates unchanged and maintained an 'accommodative' stance as the economy faces a renewed threat to growth due to the resurgence of coronavirus cases. The central bank also kept the benchmark repurchase rate unchanged at 4 per cent and maintained an 'accommodative' policy stance to support growth.

RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) kept its estimate for economic growth unchanged at 10.5 per cent for the current fiscal. The MPC also saw inflation edging up to 5.2 per cent in the first half of the new fiscal from 5 per cent in the January-March period and moderate to 4.4 per cent in Q3.

Das said cereal prices could soften in the months to come. Mitigation of inflation will depend on supply-side measures and easing of international prices, he added.  

The MPC voted unanimously to keep the status quo on repo rate, Das said. On India's rising Covid-19 cases, Das said the vaccine distribution programme and its effect on the ground are two major factors that will determine the economic recovery.

Besides, the RBI governor also announces secondary market G-Sec acquisition programme 1.0 to ensure orderly evolution of the yield curve. Under this programme, the RBI will buy Rs 25,000 crore worth of G-Secs on April 15 and Rs 1 lakh crore of G-Secs in Q1.

The RBI also increased TLTRO (Targeted Long Term Repo Operations) scheme by six more months till September 30, under which it'll ensure liquidity support of Rs 50,000 crore in fresh lending in FY22. The central bank also announces Rs 25,000 crore worth liquidity support to NABARD; Rs 10,000 crore to NHB; and Rs 15,000 crore to SIDBI.

He said the central bank will set up a committee to study the working of asset reconstruction companies to fully realise their potential. The RTGS and NEFT payment facilities have also been extended to prepaid payment instruments and white label ATMs.

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