Call Us Now

+91 9606900005 / 04

For Enquiry

RBI Monetary Policy Update


The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged.


GS III: Indian Economy

Dimensions of the Article:

  1. Key Details
  2. About Monetary Policy Committee (MPC)

Key Details:

Repo Rate:

  • The repo rate is now set at 6.50 percent.
  • It represents the rate at which the Reserve Bank of India lends money to commercial banks in case of a shortage of funds.

Standing Deposit Facility (SDF):

  • The SDF rate stands at 6.25 percent.
  • SDF is a liquidity window provided by the RBI for banks to park excess liquidity without the need for collateral.

Marginal Standing Facility (MSF) Rate:

  • The MSF rate is set at 6.75 percent.
  • MSF serves as a borrowing window for banks from the central bank during situations when inter-bank liquidity is completely depleted.

Bank Rate:

  • The Bank Rate is currently at 6.75 percent.
  • It is the rate at which the central bank lends funds to commercial banks.
  • It is important to note that while the Repo Rate and Bank Rate are different, as the Repo Rate is for short-term borrowing against securities, the Bank Rate is the rate charged for lending funds to commercial banks.

About Monetary Policy Committee (MPC)

  • The Monetary Policy Committee (MPC) is the body of the RBI, headed by the Governor, responsible for taking the important monetary policy decisions about setting the repo rate.
  • Repo rate is ‘the policy instrument’ in monetary policy that helps to realize the set inflation target by the RBI (at present 4%).
Membership of the MPC
  • The Monetary Policy Committee (MPC) is formed under the RBI with six members.
  • Three of the members are from the RBI while the other three members are appointed by the government.
  • Members from the RBI are the Governor who is the chairman of the MPC, a Deputy Governor and one officer of the RBI.
  • The government members are appointed by the Centre on the recommendations of a search-cum-selection committee which is to be headed by the Cabinet Secretary.
Objectives of the MPC

Monetary Policy was implemented with an initiative to provide reasonable price stability, high employment, and a faster economic growth rate.

The major four objectives of the Monetary Policy are mentioned below:

  • To stabilize the business cycle.
  • To provide reasonable price stability.
  • To provide faster economic growth.
  • Exchange Rate Stability.

-Source: Indian Express

April 2024