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RBI Monetary Policy 1 April 2014: Review

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01-04-2014, Tuesday, RBI Governor Raghuram Rajan kept the repo rate unchanged at 8% in the central bank’s monetary policy review.

The Monetary policy given by RBI governor on 1.04.2014

Monetary and Liquidity Measures

  •  The policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent;

  •  The cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL); and

  • increase the liquidity provided under 7-day and 14-day term repos from 0.5 per cent of NDTL of the banking system to 0.75 per cent, and decrease the liquidity provided under overnight repos under the LAF from 0.5 per cent of bank-wise NDTL to 0.25 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.

Effects on Home loans
 
With the rates unchanged the rates for new customers will definitely not increase. If Banks have the liquidity expect some Banks to announce rate cuts or special offers for new customers.
 
For customers who already have a Home loan, the change will be neither upward or downward and the EMI remains same.
 
Effects On Personal Loan
 
The rates are stabilized from 13.5% to 19% under Personal loans. Most of the banks like to give loans at an average of 16%  and give some special offers to top 500 company employees by reducing Rate to 13.5%. With no change in the liquidity by the change in the RBI policy the rates will remain the same .

 

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