N S Toor SCHOOL of BANKING

0172-2665623 | 09988221167 | ns.toor@gmail.com

www.bankingIndiaupdate.com | www.youtube.com/nstoor

Summary of RBI Monetary Policy Review Feb 05, 2021

Policy Rates as on 05.02.21:
Repo rate : 4%
Reverse Repo Rate : 3.35%
Marginal Standing Facility Rate : 4.25%
Bank Rate : 4.25%
CRR Rate : to increase to 3.5% from 3% wef 27.3.21 and to 4% wef 22.5.21
SLR Rate : 18%

1. Targeted Long Term Repo Operations (TLTRO) on Tap Scheme

RBI had introduced TLTRO on Tap Scheme on Oct 9, 2020 till Mar 31, 2021. Funds
availed by banks under TLTRO are deployed in corporate bonds, commercial paper,
and non-convertible debentures issued by entities and for loans in these sectors.
Investments can be classified as held to maturity even above 25% of total investment.
All exposures under this are exempted from large exposure framework (LEF).
RBI has extended it to NBFCs for incremental lending to these sectors.
2. Cash Reserve Ratio (CRR) :
CRR was reduced to 3% of NDTL from March 28, 2020. It will be increased to 3.5%
effective from March 27, 2021 and 4% from May 22, 2021.

VIDEOS and PDF AVAILABLE THROUGH OUR APP

Memory Promn Exam Economics, Certified Balance
Collected Video Budget and Credit Sheet
Questions of Lessons News- Professional Analysis
2020-21 Magazine (Videos) (Videos)
promn Exam (PDF)

3. Marginal Standing Facility (MSF) - Extension of Relaxation

On March 27, 2020 banks were allowed to avail of funds under MSF by dipping into the
Statutory Liquidity Ratio by additional 1% of NDTL, i.e., cumulatively up to 3% of NDTL
up to March 31, 2021.
Date exended up to September 30, 2021.
4. SLR Holdings in Held to Maturity (HTM) category

1
On Sep 1, 2020, RBI increased the limits under Held to Maturity category from 19.5% to
22% of NDTL for SLR eligible securities acquired on or after Sep 1, 2020, up to March
31, 2021.
Now it has been extended up 31.03.23.
5. Credit to MSME Entrepreneurs
Banks can deduct loans disbursed to ‘New MSME borrowers’ from their NDTL for
calculation of CRR in respect of exposures up to ₹25 lakh per borrower extended till
October 1, 2021 for a period of one year. New MSME borrowers means borrowers who
have not availed any credit facilities from the banking system as on January 1, 2021.
6. Basel III Capital Regulations: Capital Conservation Buffer (CCB)
Implementation of last tranche of CCB of 0.625%, was scheduled to take effect from
April 1, 2021. Date has been extended to October 1, 2021.
7. Deferment of the implementation of Net Stable Funding Ratio (NSFR)
Implementation of NSFR was deferred to 1.4.21. Now it shall be from October 1, 2021.
8. Remittances to International Financial Services Centres (IFSCs) under the
Liberalised Remittance Scheme (LRS)
Resident individuals can make remittances to IFSCs in India under LRS, for making
investments in securities issued by the non-resident entities in IFSCs. They may also
open a non-interest bearing Foreign Currency Account (FCA) in IFSCs for making
investments under LRS. Funds lying idle in these accounts shall be repatriated to
resident account of the investor in India within a period of 15 days from receipt.
9. Allowing Retail Investors to Open Gilt Accounts with RBI
Retail investors to get online access to govt. securities market along with the facility to
open their gilt securities account (‘Retail Direct’) with the RBI.
10. Setting up of a 24x7 Helpline for Digital Payment Services
The major payment system operators shall facilitate setting-up of a centralised industry-
wide 24x7 helpline for addressing customer queries for various digital payment products
and give information on available grievance redress mechanisms by September 2021.
11. Enabling Participation in CTS Clearing across all Bank Branches in India
Cheque Truncation System (CTS) presently covers around 1,50,000 branches. All left
over branches to be brought under the CTS clearing mechanism by September 2021.
12. Integrated Ombudsman Scheme
3 Ombudsman schemes, namely (i) Banking Ombudsman Scheme (ii) Ombudsman
Scheme for NBFCs and (iii) Ombudsman Scheme for Digital Transactions are in
operation from 22 ombudsman offices. RBI shall implement integration of 3 schemes by
adopting ‘One Nation One Ombudsman’ approach for grievance redressal by June
2021.