RBI relaxes leverage ratio for banks commencing from October 1, 2019
The Reserve Bank Friday (June 28, 2019) relaxed the leverage ratio (LR) for banks from the quarter commencing October 1, 2019. The RBI communiqué said that the decision to relax the leverage ratio for banks is to help them boost their lending capacity. As per RBI notification the leverage ratio stands reduced to 4 per…
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New base rate from July 1st for NBFCs and Microfinance Institutions
RBI fixed base rate of 9.18 for Non-Banking finance Companies and Microfinance Institutions effective from July 1st 2019. So the borrowers of these institutions will be charged not less than the above base rate for the quarter beginning from July 1. The Reserve Bank of India in a circular during 2014 had communicated to NBFCs…
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Monetary policy framework explained
Monetary policy talks about achieving the ultimate objective of economic policy of the country. It discusses to the use of monetary instruments under the control of the central bank to regulate levels such as interest rates, money supply and availability of credit with a view to achieving the objectivity. The Monetary Policy Framework intends to…
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Role of Monetary Policy Committee (MPC) on inflation target
Monetary policy decisions by central banks can have far-reaching implications for the economy, investors, small depositors and borrowers. Till the formation of MPC, RBI used to take monetary policy decision on Repo interest rates based on multiple indicator approach. The Governor of RBI being the focal point was subjected to hectic lobbying ahead of each…
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Monetary Policy: Inflation targeting
In January 2014, the expert committee headed by Dr. Urjit Patel recommended revising the monetary policy framework, and it came up with its report. In the report it was suggested that RBI must abandon the existing ‘multiple indicator approach’ and make inflation targeting the primary objective of its monetary policy. As per the recommendation, the…
What is multiple indicator approach (MIA)?
Monetary policy decisions by central banks can have far-reaching implications for the economy, investors, savers and borrowers. Between1980 to 1998, RBI adopted operating method of monetary policy ‘monetary targeting with feedbacks’. This method has been later altered pursuant to liberalization of financial markets and opening up of the economy and short-term deviation in the relationship…
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