The Reserve Bank of India announced a slew of changes to its monetary policy on Wednesday in order to encourage non-bank financial institutions such as mobile wallets and payments banks. For the fifth time in a row, the RBI keeps its policy rate unchanged at 4%. Also, the bank rate and MSF rate are kept unchanged at 4.25%. The current fiscal year's growth forecast has been kept at 10.5%. According to the report, a recent spike in COVID-19 infections has thrown the economy into doubt, and the focus should now be on containing the virus's spread.
Key RBI Monetary Policy Announcements:
In line with the policy goal of nurturing the still-nascent growth impulses, it has been decided to provide fresh support to AIFIs in the amount of 50,000 crore for new lending in 2021-22.
Payments Banks limit raised to Rs 2 lakh
The maximum balance at the end of the day has been increased from 1 lakh to 2 lakh per individual customer. Now the customer can hold Rs 2 lakh in their payments bank account.
Banks to on-lend through NBFCs
It has been decided to extend the PSL classification for lending by banks to NBFCs for 'on-lending' to the above sectors for six months, i.e. until September 30, 2021, in order to ensure continued availability of credit to these sectors and aid faster economic recovery.
Enhancement of Loan limit against eNWR/NWR
It is decided to increase the loan limit per borrower from 50 lakh to 75 lakh against the pledge/hypothecation of agricultural produce backed by NWRs/(e-NWRs) issued by WDRA-registered warehouses.
Financial Inclusion Index
The FI Index will be based on a number of factors and will reflect the country's broadening and deepening of financial inclusion. To begin, the FI Index will be released annually in July for the fiscal year that ended in March the previous year.
RTGS and NEFT by Non-Banking entities
To encourage non-bank participation in payment systems, it is proposed that payment system operators regulated by the Reserve Bank be allowed to join CPSs directly in a phased manner.
Interoperability of Prepaid Payment Instruments
The Reserve Bank of India has emphasised the importance of interoperability between issuing and acquiring entities, whether banks or non-banks. As a result, it is proposed that full-KYC PPIs and all acceptance infrastructure require interoperability. To encourage the migration of PPIs to full-KYC, it is proposed that the outstanding balance limit in such PPIs be increased from Rs 1 lakh to Rs 2 lakh.
Permitting Cash Withdrawal
Only full-KYC PPIs issued by banks are allowed to withdraw cash, and this service is available through ATMs and PoS terminals. Now customers can withdraw cash from their digital wallets and prepaid cards.