Once again the RBI has kept the ‘Repo Rate’ unchanged at 6.5%, marking the 11th consecutive time without any change. This decision was made during the Monetary Policy Committee (MPC) meeting on Friday, as announced by RBI Governor Shaktikanta Das. He also expressed concerns about rising inflation. Out of the 6 members of the MPC, 4 were not in favor of changing the interest rates. As a result the Standing Deposit Facility (SDF) rate remains at 6.35% and the Marginal standing Facility (MSF) rate and Bank Rate stay at 6.75%
Big Decision for Farmers
In a significant move for farmers, the RBI has increased the collateral-free agricultural loan limit from Rs. 1.6 lakh to Rs.2 lakh. The RBI had introduced collateral-free loans for farmers earlier, initially providing loans up to Rs. 1 lakh, which was later increased to Rs. 1.6 lakh in 2019. Now, Farmers can borrow up to Rs. 2 lakh without the need to pledge any collateral.
Gift for UPI Users
In another decision, small finance banks will now be allowed to offer credit lines on UPI, allowing users to make payments even if their accounts have insufficient funds. This decision aims to make financial transactions more accessible for a larger number of people.
The committee has reduced the Cash Reserve Ratio (CRR) for banks from 4.50% to 4%. This will increase the cash available with banks, which they can use for lending.
CRR is the minimum percentage of a bank’s deposit that must be kept as a reserve with the Reserve Bank of India (RBI). Its purpose is to control the flow of money in the economy, ensuring liquidity and stability in the market.
Shashi Rai
