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Reserve Bank of India (RBI) has announced its First Bi- monthly Monetary Policy Rates for 2017-18 in Mumbai today. You can go through the details of First Bi-monthly Monetary Statement below. The First Bi-monthly policy has been released based on the assessment of the Monetary Policy Committee of the Reserve Bank of India (RBI). Monetary Policy Rates are crucial for the exam, especially Banking awareness. We have started our series, 'Big Bank Theory' to help you all prepare for Banking Awareness in a better way. You can go through the remaining articles of this series from the link at the end of the post. 

The remaining policy statements would be released by RBI as stated below - 
Policy StatementDates of Release
Second Bi-monthly Monetary Policy Statement for 2017-18 7th June 2017
Third Bi-monthly Monetary Policy Statement for 2017-182nd August 2017
Fourth Bi-monthly Monetary Policy Statement for 2017-184th October 2017
Fifth Bi-monthly Monetary Policy Statement for 2017-186th December 2017
Sixth Bi-monthly Monetary Policy Statement for 2017-187th February 2018

RBI First Bi-Monthly Monetary Policy 2017-18 : Highlights

The Reserve Bank of India in its First bi – monthly statement 2017-18 has made the following announcements -
  • Repo rate under the liquidity adjustment facility (LAF) remains unchanged at 6.25 per cent.
  • Reverse repo rate under the LAF has been increased to 6.00 per cent from earlier rate of 5.75%.
  • Marginal standing facility (MSF) rate and the Bank Rate have been reduced 6.50 per cent from earlier rate of 6.75%. 
  • Cash Reserve Ratio (CRR)remains unchanged at 4%
  • RBI has forecasted Gross Value Added (GVA) growth at 7.4% in the financial year 2017-18 and 8.1% in FY19. 
  • As per RBI's report, the decision of the Monetary Policy Committee (MPC) is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

Let us now understand some common terms of the Policy rates - 

Repo Rate 

It is the rate at which RBI lends money to commercial banks.

Reverse Repo rate

It is the rate at which RBI borrows money from commercial banks.

Cash Reserve Ratio (CRR)

The share of net demand and time liabilities (deposits) that banks must maintain as cash balance with the Reserve Bank.

Statutory Liquidity Ratio (SLR)

The share of net demand and time liabilities (deposits) that banks must maintain in safe and liquid assets, such as, government securities, cash and gold.

Bank Rate

It is the rate at which the Reserve Bank is ready to buy or re-discount bills of exchange or other commercial papers for long term.

Marginal Standing Facility Rate (MSF)

The rate at which the scheduled banks can borrow funds from the RBI overnight, against the approved government securities is termed as MSF.
Note - 
  • The minutes of the MPC’s (Monetary Policy Committee) meeting will be published by April 20, 2017.
  • The next meeting of the MPC is scheduled on June 5 and 6, 2017.
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