On Wednesday, the Reserve Bank of India (RBI) has announced that the repo rate will remain unchanged at 4% amid a steep rise in Covid-19 cases and the imposition of fresh restrictions.
“The RBI will keep the repo rate unchanged at 4%. Banks will continue to maintain an accommodative stance as long as necessary to diminish the impact of the Covid-19 pandemic,” RBI governor Shatikanta Das said, adding that the reverse repo rate will remain untouched at 3.35%.
The RBI governor also said that the sudden surge in Covid cases has forced state governments to impose restrictions adds uncertainty. “The recent surge in Covid-19 cases adds uncertainty to the domestic growth outlook as some state governments are tightening restriction,” the RBI governor said.
The RBI governor also pointed out that the GDP growth projection for 2021-22 is retained at 10.5%. He also said that the inflation target is retained at 4%. “On March 31, 2021, the Centre retained the inflation target at 4% with the lower and upper tolerance levels of 2% and 6%, respectively, for the next five years, that is from April 2021 to March 2026," Das said.
Das also said the Monetary Policy Committee (MPC) voted unanimously to keep the policy rates unchanged during its 3-day review meet that began on Monday.
The RBI governor said that the fresh lending of Rs 50,000 crore will be provided to financial institutions. Out of the Rs 50,000 crore, the RBI will lend Rs 25,000 crore to NABARD, Rs 10,000 crore to National Housing Board and ₹15,000 crore to SIDBI.
The RBI also informed that the current limit on the maximum end of day balance of Rs 1 lakh per individual customer has increased to Rs 2 lakh.