Relevance IN - Prelims ( about the MPC bimonthly monetary policy review highlights ) +Mains ( GS III economic developments)

Focus points

• The Reserve Bank of India cut the repo rate by 25 basis points to 5.75 percent on Thursday, 6 June. The reverse repo rate and the bank rate have been adjusted at 5.50 and 6 percent respectively.
• The stance has been changed from "neutral" to "accommodative" and the GDP growth forecast for 2019-20 has been adjusted to 7 percent from 7.2 percent in earlier projection.
• Meanwhile, the inflation outlook has been projected at 3-3.1 percent in the first half of 2019-20 (April-September), and 3.4-3.7 percent in the second half.

What's the NEWS

• The Monetary Policy Committee (MPC) of the Reserve Bank of India on Thursday effected a 25 basis points cut in repo rate in its second bimonthly policy review of this financial year. After the cut, the repo rate now stands at 5.75 per cent, the lowest since July 2010.
• Reduce the policy Repo Rate under the Liquidity Adjustment Facility (LAF) to 5.75 percent from 6 percent
• The Reverse Repo Rate under the LAF stands adjusted to 5.50 percent
• The Marginal Standing Facility (MSF) rate and the Bank Rate stand at 6 percent
• The monetary policy stance changed from neutral to accommodative.

Know! more about the outcome of second bimonthly policy review by MPC

• The decision of the MPC was consistent with the monetary policy in consonance with the objective of achieving the medium-term target for Consumer Price Index (CPI) inflation of 4 percent within a band of +/- 2 percent.
• Repo is the rate at which the central bank lends to commercial lenders, and the cut signalled a drop in cost of funds for corporate .
• This was third rate cut in a row by the central bank, and the move was largely in line with Street expectations.
• The committee has kept cash reserve ratio (CRR) unchanged at 4 per cent.
• The Monetary Policy Committee (MPC) voted unanimously (6-0) in favour of the rate cut and the change in stance.

Know! the other decisions of the Monetary Policy Committee

• RBI revises GDP growth for year 2020 downwards to 7 percent from 7.2 percent projected earlier
• The Bank expects GDP growth of 6.4-6.7 percent in the first half of FY20 and 7.2-7.5 percent in the second half of the fiscal year
• The CPI Inflation forecast for first half of the FY20 has been revised upwards to 3-3.1 percent and to 3.4-3.7 percent for the second half of FY20
• Minimum Liquidity Ratio for Domestic Systemically Important Banks (DSIBs) to be 4 percent. For other banks, Minimum Liquidity Ratio shall be 3.5 percent
• RBI to consider ‘on tap' licensing of Small Finance Banks

• A ‘Working Group' will be set up to review regulatory guidelines for currency in circulation (CICs)
• An ‘Internal Working Group' will be constituted to review liquidity management framework
• The central bank has also decided to do away with charges levied on RTGS and NEFT transactions, with the banks required to pass this benefit to their customers.
• It has also been decided to set up a committee, involving all stakeholders, under the chairmanship of the CEO of Indian Banks' Association (IBA), to examine the entire gamut of ATM charges and fees. The committee will submit its recommendations within two months of its first meeting

Repo Rate

• Repo rate is the rate at which all the banks borrow funds from the Reserve Bank of India.

Reverse Repo Rate

• Reverse Repo Rate is the rate at which banks park their funds with the RBI.

RBI removes charges on RTGS & NEFT transactions; sets up Committee on ATM charge review
Relevance IN - Prelims ( about the RBI's recent changes to boost digital payment) + Mains ( GS III economic development)
What's the NEWS

• The Reserve Bank of India has done away with the charges levied on fund transfers through RTGS and NEFT.
• The central has also asked the banks to pass on the benefits to customers, a move that will boost digital transactions.
• The decision was announced by the RBI as part of its measures to deepen and broaden the financial markets.
• At present, RBI levies minimum charges on banks for RTGS and NEFT transactions of fund transfers and Banks in turn levy charges on their customers for the same.

Know! the recommendation of Nandan Nilekani-led committee

• The decision comes after the Nandan Nilekani-led Committee on Digital Payments gave out a few suggestions lately to promote digital payments in India.
• Nilekani panel suggested to do away with the RTGS and NEFT facilities and also recommended that these facilities should be available 24x7. The Committee also recommended duty free import of point of sales machines.

Committee set up to review ATM charges

• RBI has also decided to set up a committee to review the charges levied on the use of Automated Teller Machines (ATMs) by the public.
• The RBI has been receiving persistent demands to change the ATM charges and fees. The central bank also observed that the usage of ATMs has grown significantly in India.
• Considering these, the RBI decided to set up a committee that will involve all stakeholders under the Chairmanship of the Chief Executive Officer of the Indian Banks' Association (IBA) to examine the present system of ATM usage and the charges levied.

Government reconstitutes 8 Cabinet Committees

Relevance IN - Prelims ( about the cabinet committees)

What's the NEWS

• The Government reconstituted eight key cabinet committees under the Transaction of Business Rules.

Following are the eight cabinet committees:

1. Appointments Committee of the Cabinet
2. Cabinet Committee on Accommodation
3. Cabinet Committee on Economic Affairs
4. Cabinet Committee on Parliamentary Affairs
5. Cabinet Committee on Political Affairs
6. Cabinet Committee on Security
7. Cabinet Committee on Investment and Growth
8. Cabinet Committee on Employment and Skill Development

Composition of Cabinet Committees
Appointments Committee of the Cabinet

• Prime Minister Narendra Modi Home Minister Amit Sha

Cabinet Committee on Accommodation

• Amit Shah, Nitin Gadkari, Nirmala Sitharaman and Piyush Goyal Jitendra Singh, Hardeep Singh Puri

Cabinet Committee on Economic Affairs

• Prime Minister, Amit Shah, Rajnath Singh, S Jaishankar, Nitin Gadkari, DV Sadananda Gowda, Nirmala Sitharaman, Narendra Singh Tomar, Piyush Goyal, Ravi Shankar Prasad, Harsimrat Kaur Badal, Dharmendra Pradhan

Cabinet Committee on Parliamentary Affairs

• Amit Shah, Nirmala Sitharaman, Ravi Shankar Prasad, Prakash Javadekar, Ramvilas Paswan, Narendra Singh Tomar, Thawar Chand Gehlot, Prahlad Joshi

Cabinet Committee on Political Affairs

• Prime Minister, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Ramvilas Paswan, Narendra Singh Tomar, Ravi Shankar Prasad, Harsimrat Kaur Badal, Harsh Vardhan, Piyush Goyal, Arvind Sawant, Prahlad Joshi

Cabinet Committee on Security

• Prime Minister, Amit Shah, Rajnath Singh, Nirmala Sitharaman, S Jaishankar

Cabinet Committee on Investment and Growth

• Prime Minister, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Piyush Goyal

Cabinet Committee on Employment and Skill Development

• Prime Minister, Amit Shah, Nirmala Sitharaman, Piyush Goyal, Narendra Singh Tomar, Ramesh Pokhriyal, Dharmendra Pradhan, Mahendra Nath Pandey, Santosh Kumar Gangwar, Hardeep Singh Puri

Know! more about the Reconstitution of Cabinet Committee

• Home Minister Amit Shah has been included in all eight cabinet committees, while the Prime Minister himself is in six committees.
• The Prime Minister is in all committees except for Cabinet Committee on Accommodation and Cabinet Committee on Parliamentary Affairs.
• The newly-appointed Finance Minister Nirmala Sitharaman is also on six committees - Cabinet Committee on Accommodation, Economic Affairs, Parliamentary Affairs, Political Affairs, Security, Investment and Growth and Committee on Employment & Skill Development.
• On the other hand, Defence Minister Rajnath Singh has been included in only two committees- Cabinet Committee on Security and Cabinet Committee on Economic Affairs.
• Smriti Irani has not been fully included in any of the committees, she has been included as a special invitee on the Cabinet Committee on Employment and Skill Development.
• The key cabinet committee on security includes the Prime Minister, Amit Shah, Sitharaman, Jaishankar and Rajnath Singh.

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