As Sensex hit 45k yesterday the Reserve Bank of India revised the economic growth to -(7.5)% for the current financial year (2020-21) due to covid-19 which was earlier -(9.5)%.
The RBI Governor also expects the second half of the financial year to show positive growth.
A Monetary Policy is a policy that controls the money supply in the economy by various aims, objectives, and tools.
The Monetary Authority is given to specialized Central banks like the Reserve bank in India and the Federal Reserve in America which uses Monetary policy to uphold economic stability.
Monetary Policy targets and controls the various:
-Interest Rate
-Bank Rate
-Money Supply
-Inflation
-Price Stability
-Trust On Currency
These aims are made under the plan of action. First of all these aims are drafted then they are announced and lastly they get implemented in the economy.
In our economy, if the money supply increases or decreases then it comes under the term Inflation & Deflation.
The money supply largely affects Consumption, growth, and Money LIquidity.
He talked about some of the major issues which were:
Banks do not pay dividends.
-Banks will retain profits earned in FY20.
-Scale-based regulatory approach for NBFCs would be necessary.
He also talks about Digi payments, where he added “RBI strengthens regulatory & Compliance norms for Banks.
-Real Time Gross Settlement (RTGS) System will be implemented soon.
It also announced measures to increase businesses for exporters as soon as the confirmed news of Covid-19 vaccines trials arrived and the shipment would be under the process of Pfizer and Reizen.
Mr.Shaktikanta Das says “The RBI is not indifferent to any segment of the economy or Financial markets, we make decisions first in the best interest of the depositors that is the paramount responsibility of the Reserve Bank of India to protect the interest off the depositors and on our actions within the legal framework as per law & regulatory guidelines”.
On the inflation or mispricing risk & bank licenses to corporates & licenses to NBFCs owned by Corporate according to Internal RBI report he died “ It is a report by an internal working group of RBI, it should not be seen as RBI point of view or decision it should be very clear”.
“RBI has not taken any decisions on such issues so far as I said in the Monetary Policy Statement our approach is consultative, the report of the internal working group is now in the public domain, we will receive comments after getting comments from various stakeholder & others who wished to give their comments to us, We will examine the whole matter and take a considered decision that is our stand.”
The economic recovery of rural areas would be strengthened more than urban areas. The expectations are positive for the second quarter of Q2FY21.
