News:Reserve Bank of India’s Monetary Policy Committee(MPC) has come out with its own measures to help deal with economic fall out of COVID-19 pandemic.
- Repo Rate:It is the rate at which the RBI lends money to the banks for a short term.It has been cut by 75 basis points (bps) from 5.15% to 4.40%.
- Reverse Repo Rate:It is the short term borrowing rate at which RBI borrows money from banks.It has been cut by 90 bps to 4%.
- Moratorium on Repayments of Loans: RBI has allowed banks to defer payment of Equated Monthly Installments (EMIs) on home, car, personal loans as well as credit card dues for three months.
- Cash Reserve Ratio(CRR):It refers to a certain percentage of total deposits the commercial banks are required to maintain in the form of cash reserves with the central bank.It has been cut to 3% from 4%.
Monetary Policy Committee(MPC):
- It is a committee of the Reserve Bank of India which consists of six members with three nominated by the Union government and three representing the RBI.
- It is mandated by law to ensure that retail inflation stays within a band of two percentage points of the target inflation rate of 4%.