RBI's Monetary Policy Statement October 2021: Know Committee Members, Policy Rate, Ratio, Decision!

By Vijay Kumar|Updated : October 12th, 2021

RBI's Monetary Policy Statement October 2021: Reserve Bank of India (RBI) has announced its bi-monthly monetary policy review for October 2021 in Mumbai today after three days of deliberations of its monetary policy committee (MPC).

Table of Content

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting decided to:

  • Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent.
  • The Marginal Standing Facility (MSF) rate and the Bank rate remain unchanged at 4.25 per cent.
  • The reverse repo rate stands unchanged at 3.35 per cent.
  • The MPC also decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.
  • These decisions are 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.

The Meeting of the Monetary Policy Committee (MPC), constituted under section 45ZB of the Reserve Bank of India Act, 1934, was held from 5th to 8th October 2021.

Monetary Policy Committee Members

  1. Shri Shaktikanta Das,
  2. Dr Shashanka Bhide,
  3. Dr Ashima Goyal
  4. Dr Mridul K. Saggar,
  5. Dr. Michael Debabrata Patra
  6. Prof. Jayanth R. Varma

Note: The MPC voted 5-1 to retain the accommodative stance as long as necessary to sustain growth on a durable basis while ensuring that inflation remains within the target.JR Varma, an external member, pushes to end accommodative stance

RBI Monetary Policy Key Decisions

  • RBI projects FY22 GDP growth forecast maintained at 9.5%
  • CPI inflation is projected at 5.3% for the current fiscal year.
  • Bond purchases under G-SAP stopped.
  • Open market operations to continue as needed
  • Internal ombudsman plan for non-bank lenders.
  • On-tap special LTRO of 3 years worth Rs 10,000 crore for small businesses extended till 31st Dec 2021.
  • Framework planned for retail digital payments in offline mode
  • IMPS per transaction cap raised from Rs 2 lakh to Rs 5 lakh
  • VRR auctions are to be stepped up fortnightly from Rs 4 lakh crore to Rs 6 lakh crore.

RBI Monetary Policy Rates

Policy Repo Rate4.0%
Reverse Repo Rate3.35%
Marginal Standing Facility Rate4.25%
Bank Rate4.25%

RBI Monetary Reserve Ratios

CRR

3%

SLR

18.00%

Note: The next meeting of the MPC is scheduled from 6-8 December 2021 (fifth meeting).

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

1. Repo Rate 

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

2. Reverse Repo rate

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

3. Cash Reserve Ratio (CRR)

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

4. 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.

5. Bank Rate

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

6. 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.

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FAQs

  • The members of RBI Monetary Policy are Shri Shaktikanta Das, Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Mridul K. Saggar, Dr. Michael Debabrata Patra, and Prof. Jayanth R. Varma.


  • The RBI Monetary Policy Repo Rate is 4.0%.

  • The RBI Monetary Policy Reverse Repo Rate is 3.35%.

  • The RBI Marginal Standing Facility Rate is 4.25%.

  • The RBI Monetary Policy Bank Rate is 4.25%.

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