Monetary policy August 2020: The RBI MPC voted unanimously to maintain the status quo on key rates.

Highlights of the RBI’s monetary policy in August 2020: RBI Governor Shaktikanta Das announced today that the repo rate will remain unchanged. The RBI MPC voted unanimously to maintain the status quo on key rates. Shaktikanta Das added that the MPC will remain vigilant regarding the dynamics of inflation to make more use of the available space on the monetary side, if necessary. The RBI governor also announced stimulus measures, which included additional cash of Rs 10,000 crore at the repo rate at NABARD and NHB. “RBI’s move will certainly help the shocked industry weather the liquidity crunch. The improved financial flow should allow developers in need of last mile funding to bring their projects to a standstill, ”said Niranjan Hiranandani, President of Assocham and Naredco. Among other measures, the RBI allowed stressed MSME borrowers to restructure their debt if their loans were classified as “standard” as of March 1, 2020. The MSME loan restructuring program was already in place, but, due to the coronavirus, the MSME pain has been worsened, and this warrants additional support, added Shaktikanta Das. In order to mitigate the impact of COVID-19 on households, the RBI has increased the loan-to-value ratio (LTV) allowed for loans sanctioned against the pledge of gold ornaments and jewelry for non-agricultural purposes by 75 % to 90%. until March 31, 2021.

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