11 PILLAR1A2: 🤑🤑 MONEY SUPPLY & MONETARY POLICY UPDATES

Index
11 Pillar1A2: 🤑🤑 Money Supply & Monetary Policy .............................................................................. 22
11.1 What is already covered in Past: 1A2 (RBI Monetary Policy)? ............................................ 23
11.1.1 Win20: already covered Following in 1A2 .......................................................................... 23
11.1.2 Win21: already covered Following in 1A2 .......................................................................... 23
11.2 💸💸💸💸Supply of Money (मुद्रा क� आपू�त) Trend as per ES22 ....................................................... 23
11.3 💸💸💸💸Supply of Money (मुद्रा क� आपू�त) ........................................................................................ 24
11.3.1 Money Multiplier From 2019 to 2021: why fallen? ........................................................... 25
11.3.2 Money Multiplier From 1981 to 2020.................................................................................. 25
11.3.3 💸💸⚡: Currency in Circulation (CIC) ................................................................................ 26
11.4 🐯🐯🐯🐯 MONETARY POLICY: Quantitative Tools: CRR & SLR ....................................... 26
11.5 🐯🐯🐯🐯 MONETARY POLICY: Quantitative Tools: REPO ................................................. 27
11.6 🐯🐯🐯🐯 REPO → Special Windows under Atma Nirbhar ................................................... 27
11.7 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Reverse Repo & VRRR ................................... 28
11.7.1 🐯🐯🐯🐯 🎛🎛 Enhanced Reverse Repo Rate for Hardworking Bankers............................. 29
11.8 🐯🐯🐯🐯 MONETARY POLICY: Quantitative Tools: OMO & GSAP .................................. 29
11.8.1 🐯🐯🐯🐯🐯🐯: 📅📅 MonPolicy: Quant Tools: OMO → G-SAP .......................................... 30
11.8.2 🐯🐯🐯🐯🐯🐯:📅📅 OMO → G-SAP : Benefit? ......................................................................... 30
11.8.3 Why G-SAP? Why not achieve this objective via ⏬ reducing REPO ? ........................ 30
11.9 🐯🐯🐯🐯US Fed Tapering & Impact on India ........................................................................... 31
11.10 🐯🐯🐯🐯🐯🐯 MONETARY POLICY: QUALITATIVE TOOLS (गुणा�क साधन) ....................... 31
11.11 📢📢 Bi-Monthly Monetary Policies- A Summary Table ........................................................ 32
11.11.1 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2021 update(दरों म� कोई बदलाव नहीं) ............................. 32
11.11.2 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2021 update (दरों म� कोई बदलाव नहीं).............................. 32
11.11.3 🐯🐯🐯🐯🐯🐯Monetary Policy: Aug-2021 update (दरों म� कोई बदलाव नहीं) .............................. 32
11.11.4 🐯🐯🐯🐯🐯🐯Monetary Policy: Oct-2021 update (दरों म� कोई बदलाव नहीं) ............................... 33
11.11.5 🐯🐯🐯🐯🐯🐯Monetary Policy: Dec-2021 update (दरों म� कोई बदलाव नहीं) ............................... 33
11.11.6 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2022 update (दरों म� कोई बदलाव नहीं) ............................... 33
11.12 �📡📡MRUNAL’S ECONOMY COURSE FOR UPSC PRELIMS & MAINS .................. 34
11.12.1 Mock Questions for Prelims ............................................................................................ 34
11.12.2 �🎺🎺🎺🎺1⃣✋ Mock Questions for UPSC Mains/GSM3 (250 words) ..................... 34

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 22

11.1 WHAT IS ALREADY COVERED IN PAST: 1A2 (RBI MONETARY POLICY)?
�न� चीज़� हम पहले ही पढ़ चुके ह�. आपने नहीं पढ़ा तो उसम� से देख लेना

11.1.1 ✅Win20: already covered Following in 1A2👇👇

 ES20: data on Measures of Money Supply [M1, M3]
 🐯🐯🐯🐯🐯🐯 Long Term Repo Operations (LTROs)
 🐯🐯🐯🐯🐯🐯🐯🐯RBI’s Operation Twist (2019-Dec)
 🔪🔪🔪🔪: 🤑🤑 Bond Yield: Related Concepts
 🔪🔪🔪🔪: 📉📉📉📉 Inverted Yield Curve = recession is coming
 🔪🔪🔪🔪: 📉📉 🍕🍕🍕🍕 Negative Bond Yield
 🐯🐯🐯🐯RBI’s Bi-monthly Monetary Policies upto Feb-2020
 🔪🔪🔪🏠🏠🏠🏠 Bank’s loan interest rate: External Benchmark (बाहरी ब�चमाकर् ,2019)

11.1.2 ✅Win21: already covered Following in 1A2👇👇

 😷😷😷😷😷😷😷😷Corona-2020 Impact on Money Supply, M0, M3, money multiplier as per
📔📔📔📔ES21
 🐯🐯🐯🐯Reverse Repo Rate cut & Policy corridor Changed asymmetrically
 💍💍 Margin Requirements / Loan to Value (LTV) (सीमा अ�नवायर्ता)
 🐯🐯🐯🐯🐯🐯 Priority Sector Lending Reforms in 2020 (PSL: प्राथ�मकता �ेत्र के �लए ऋण मानक)
 🐯🐯🐯🐯RBI’s Bi-monthly Monetary Policies upto Feb-2021

11.2 💸💸💸💸SUPPLY OF MONEY (मुद्रा क� आपू�त) TREND AS PER ES22

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 23

11.3 💸💸💸💸SUPPLY OF MONEY (मुद्रा क� आपू�त)

💸💸💸💸💸💸Indicator 😷😷 in 2020 Corona Situation in 2021

M0 = also known as reserve
money /high powered money
M3 = “Aggregate Monetary
Resources / Aggregate Money
Supply” (सम� मौिद्रक सं साधन).
Money multiplier
= M3 divided by M0
(मुद्रा गुणक)
Quantity ⏫ , Quantity ⏫increased but %
Percentage ⏫ than 2019 growth lower than 2020. वृ�द्ध दर
�पछले साल क� अपे�ा कम रहा
Quantity ⏫ , Quantity ⏫increased but %
Percentage ⏫ than 2019 growth lower than 2020
(5.6 on 31/3/20) (5.2 on 31/3/21)
No significant change / Lower than 2020. (Reason:
remained supressed Bankers couldn’t find enough
compared to 2019 loan taker, so, parked large
(ख़ास बदलाव नहीं) quantity of deposits with RBI
under reverse repo window.)

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 24

11.3.1 Money Multiplier From 2019 to 2021: why fallen?

Money multiplier fallen from 5.6 on 31/3/20 to 5.2 on 31/3/21 because

⇒ if banks kept loaning to households & business firms then (M3/M0)=Money Multiplier would
grow thru 'zigzag' lending-deposit activity from One bank account to another bank account.
⇒ But this deposit-to-lending activity seems to have slowed down in Corona & afterwards, and
banks parking more quantity of money in reverse repo in RBI. That’s why multiplier is falling.
यिद वह पैसा �रज़वर् ब�क म� �रवसर् रेपो रेट म� डालने क� वजह, ब�क वाले लोन म� घुमाते तो मुद्रा गुणक म� बढ़ोतरी दजर् होती, लेिकन कोरोना के
चलते लोगों म� लोन क� उ�ुकता कम देखी गई. ब�कर काफ� सारा पैसा �रवसर् �रपो के नाम पे �रजवर् ब�क म� वापस डाल रहे थे, इस�लए मुद्रा
गुणक म� �गरावट।

✋Note: There may be 500 other factors as well affecting these indicators but gives poor:cost benefit
learning all those things from MCQ point of view. वा��वक �जदं गी म� और भी 500 कारकों के चलते इन आंकड़ों पर
असर होता है लेिकन उन सब क� पं चात करने बैठे तो परी�ा के �लए उपयोगी नहीं #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो

11.3.2 Money Multiplier From 1981 to 2020

- Between mid-1990’s to 2016-17: Money multiplier (measured as a ratio of M3/M0) was mostly
⏫. But 2017-18 onwards: Money Multiplier is ⏬. Could be attributed to the lack of growth in
loaning activities & slowdown in economy.

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 25

11.3.3 💸💸⚡: Currency in Circulation (CIC)

- What is CIC’s exact formula? Ans. Economic Survey didn’t give, so I didn’t bother to Google.
- CIC is an indicator to measure cash as a payment instrument i.e. instead of other payment
instruments such as Cheque, NEFT/RTGS, Card etc. (भुगतान के �लए नक़दी का िकतना प्रयोग हो रहा है)
- Currency in Circulation (CIC) growth (%) declined from 2021-Jan to 2022-Jan.
- Reason: Corona-led precautionary demand for cash has reduced/subsided → People are
keeping less qty of cash in hand, and depositing more qty in Banks. (लोगों म� कोरोना का ख़ौफ़ कम �आ है
इस�लए जनता अब एह�तयादी �प म� हाथ म� नक़दी कम मात्रा म� रखती है।)
11.4 🐯🐯🐯🐯📈📈 MONETARY POLICY: QUANTITATIVE TOOLS: CRR & SLR

Tool Changes in Corona-2020 upto 2022-Feb

CRR 2020= 4% to 3% to ⏫loanable funds in Corona.
(Cash Reserve 2021: now enough loanable funds available& economy recovering so to be
Ratio) increased gradually from 3% to 4% → CRR is back to 4%
SLR Statutory Liquidity Ratio Unchanged @18%

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 26

11.5 🐯🐯🐯🐯📈📈 MONETARY POLICY: QUANTITATIVE TOOLS: REPO

MSF REPO Reverse Repo Total width

What? Banks borrow short All clients borrow short Clients park Policy corridor
term funds from term funds by pledging surplus funds (नी�त ग�लयारा)
RBI by pledging G- G-Sec. But, banks can’t in RBI to earn
Sec from SLR-quota pledge SLR quota G-Sec interest
Since 4.25% 4.00% 3.35% 25+65=90bps
2020-May

11.6 👻👻🐯🐯🐯🐯📈📈 REPO → SPECIAL WINDOWS UNDER ATMA NIRBHAR

Figure 1: कोरोना प�ात लोन म� �ादा पैसा घुमाके अथर्तंत्र को वापस खड़ा करने के �लए �रज़वर् ब�क ने ये नई �खड़िकयाँ खोली है

#In above chart, All Banks doesn’t include Payment Banks. since can’t give loans (Ref:📑📑Pillar#1B1)

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 27

 Tools Changes in Corona-2020 upto 2022-Feb
Repo RBI's short term loan interest rate to clients while using non-SLR-quota G-
Sec as collateral. Repo Interest ⏬from 5.15 to 4.00% = 1.15% = 115 basis
points cut= Cheaper loans to revive economy
TLTRO Targeted Long Term Repo Operations (TLTRO): Up to 3 years Repo loans
to Banks with condition that they must invest x% of it in y sector. ("Y"
could be debt instruments of NBFC & other stressed sectors)
RBI injected over ₹1.25 lakh crore via this route
Special LTRO RBI loan for 3 years @Repo% to ONLY Small Finance Banks (SFB) →
Window (SLTRO) Loans to A) Micro and small industries (सू� और लघु उद्योग) B) Unorganized
sector entities (असं गिठत �ेत्र)
💊💊💊💊 On-Tap RBI loan for 3 years @Repo% to Banker → loans to Hospitals, vaccine
Liquidity Windows manufacturer, vaccine importers, medical device makers, oxygen suppliers
for Healthcare etc (अ�ताल, टीका उ�ादक, आयात करने वाले �चिक�ा साधन बनाने वाले इ�ािद)
🍸🍸⛱ On-Tap RBI loan for 3 years @Repo% to Banker → Hotels, Restaurants, Tour
Liquidity Windows Operators, Bus Operator, Car Repair Service, Beauty Parlours/Spa/Saloons,
for Contact- Event/Conference Organisers ब�कर ने ये पैसा �शर्-सं वेदनशील उद्योग �ेत्र जैसे प्रवासन
Intensive Sectors उड्डयन इ�ािद को कज़र् म� देना होगा
AIFI RBI loaned large qty of money to All India Financial Institutions (AIFI) i.e.,
NABARD, NHB, SIDBI and EXIM Bank

11.7 🐯🐯🐯🐯🐯🐯 MONPOLICY → QUANT TOOLS → REVERSE REPO & VRRR

📍📍TRADITIONAL FIXED REVERSE REPO 🔨🔨🙋🙋VARIABLE RATE REVERSE REPO
Interest Rate fixed by RBI e.g. 3.35% Interest Rate decided by Bidding process of clients
(�रजवर् ब�क द्वारा �रवसर् रेपो रेट क� दर पहले से ही तय कर दी (How? Explained in video but not important.)
जाती है.) Thus, RBI not fixing the percentage% in advance.
It is variable%...depending on bidding action of
clients.
RBI can reject/refuse to accept reverse repo same as the left cell.(आरबीआई �रवसर् रे पो दर मै ग्राहक क�
deposits from clients without giving him any िडपा�जट लेने से मना कर सकता है, �बना कोई उस ग्राहक को कारण
reasons. बताए.)
-- This activity was paused during Corona 2020 but
resumed in 2021-January.
Reasons for conducting VRRR (�ों यह “प�रवतर्नीय दर वाला उ�क्रय अनुबंध” खेल खेला जा रहा है?)

⇒ Because RBI wants to suck excess money supply from the market without modifying the 'fixed'
reverse repo % (�रवसर् रेपो के �न��त दरों म� छे ड़छाड़/बदलाव िकए �बना �रजवर् ब�क बाजार से अ�त�र� पैसा चूस सके .)
⇒ Clients can hope to earn more interest rate in VRRR than fixed rate reverse repo. (VRRR नीलामी म�
िकस प्रकार क� बो�लयां लगाई गई है उस िहसाब से ग्राहक को शायद थोड़ा �ादा �ाज कमाने �मले)

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 28

11.7.1 🐯🐯🐯🐯 🎛🎛 Enhanced Reverse Repo Rate for Hardworking Bankers
⇒ If Bankers uses Sector Specific On-tap Liquidity Window (e.g. bankers taking loans from RBI to
lend to hotel, beauty parlours, vaccine manufacturer etc). यिद कोई ब�कर �रज़वर् ब�क द्वारा बनाई गई �ेत्र �वशेष
�खड़िकयों से पैसा कजर् म� लेके �व�वध �ेत्रों को देता है
⇒ If this banker achieved Rs.“XX” loan giving target, then, IF he parks his surplus funds under
Reverse Repo Window → RBI will pay him 3.75% Reverse Repo Rate. (instead of 3.35% reverse
repo paid to lazy bankers.) तो उस मेहनतकश ब�कर को रीवसर् रीपो रेट म� �रज़वर् ब�क �ादा प्र�तशत �ाज देगी, अ�
आलसी ब�करों क� तुलना म�.
⇒ 🤩🤩Benefit? It encourages bankers to work harder to give loans to various sectors.
⇒ 😤😤 FAQ/Moral Outrage? How / Why is this possible? How can banker borrow money and yet
have surplus funds? Ans. Banker will not instantly get all borrowers on day1. So, often he would
invest his surplus money (of depositors) temporarily in RBI (under Reverse Repo)- just to earn
small amount of profit, instead of letting the cash stay idle in his bank office. (ब�कर को यिद तुरंत कजर्
लेने वाला कोई ग्राहक नहीं �मले तो छोटी अव�ध के �लए ब�कर अपना पैसा �रजवर् ब�क म� रखेगा �ाज कमाने के �लए)

11.8 🐯🐯🐯🐯📈📈 MONETARY POLICY: QUANTITATIVE TOOLS: OMO & GSAP

OMO ⇒ RBI is selling G-Sec to control inflation.

⇒ RBI is buying G-Sec to fight deflation. मुद्रा���त(मं हगाई)/अप���त(स�ाई) से लड़ने के �लए
�रज़वर् ब�क सरकारी प्र�तभू�तयों को बेचेगी/खरीदेगी
⇒ Its timetable NOT announced in advance, in detailed manner, unlike G-SAP.
�रज़वर् ब�क के �ववेक/मनमज़� पर अ�नय�मत समय पर ये िक्रया होती थी। समय से पूवर्, �व�ृत �प से इसक�
समय ता�लका प्रका�शत नहीं क� जाती थी।
⇒ OMO window is NOT discontinued. It’ll continue to function as per discretion
of RBI. इस �खड़क� को बं द नहीं िकया गया। �रज़वर् ब�क के �ववेकानुसार भ�व� म� भी जारी रहेगा.
Op.Twist ⇒ RBI is Buying and Selling of G-Sec of varying maturities

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 29

 ⇒ To reduce G-Sec yield → so future borrowing becomes cheaper for Government
and Companies. �रज़वर् ब�क द्वारा �भ� �भ� अव�ध/�मयादी क� सरकारी प्र�तभू�तयों को खरीदना और
बेचना तािक यी� कम हो सके तािक भ�व� म� सरकार तथा कं प�नयों के �लए कजार् लेना स�ा हो सके ।
⇒ How it works exactly? Is explained in Win21 Series Lecture video.
G-SAP ⇒ RBI is buying G-Sec to increase money supply → Post-corona revival.
⇒ Money amount, date&time/calendar/timetable is transparently & systematically
announced in advance before starting.
⇒ इसम� पैसों क� मात्रा, समय-ता�लका सब कु छ पारदश� और �व��त �प से, ख़रीदारी शु�आत करने से पहले
�रज़वर् ब�क प्रका�शत कर देता है।

11.8.1 🐯🐯🐯🐯🐯🐯: 📅📅 MonPolicy: Quant Tools: OMO → G-SAP

⇒ Full form: (Secondary Market) G-sec acquisition programme
⇒ Mechanism: RBI to buy G-Sec from Secondary market on specified timetable. एक �न��त समय ता�लका
के िहसाब से �रज़वर् ब�क िद्वतीय बाज़ार से सरकारी प्र�तभू�तयां ख़रीदेगा
G-SAP During these months Total
G-SAP 1.0 (पहला चरण) → 1 Quarter of 2021-22 =April to Jun 2021 (पहली �तमाही)
st
₹1.0 Lakh cr
G-SAP 2.0 (िद्वतीय चरण) → 2 Quarter of 2021-22 = July to Sept 2021 (दू सरी �तमाही)
nd
₹1.2 Lakh cr

11.8.2 🐯🐯🐯🐯🐯🐯:📅📅 OMO → G-SAP : 🤩🤩Benefit?

⇒ ⏫ Money supply in the economy. (अथर्तंत्र म� मुद्रा आपू�त बढेगी)
⇒ Investors, who sold G-Sec to RBI= those investors got ₹₹ →They may 1) do shopping and/or 2)
invest in other companies shares/bonds→ 1+2=economic growth. मुद्रा आपू�त म� बढ़ोतरी के चलते �नवेशकों
के हाथ म� पैसा आएगा तो वे बाज़ार से ख़रीदारी कर�गे, अ� क��नयों म� �नवेश कर�गे→ देश क� आ�थक वृ�द्ध म� मदद �मलेगी

11.8.3 😤😤Why G-SAP? Why not achieve this objective via ⏬ reducing REPO ?
⇒ Every person may not be interested in taking new bank loans. Some investors may be interested
in selling their previous investments in G-Sec to unlock the money. (हर ��� ब�क से कज़र् लेगा ये ज़�री
नहीं है। कु छ �नवेशक अपना पुराना G-sec �नवेश बेचकर पैसा बटोरना चाहते हो तो जी-सेप म� आ सकते है)
⇒ if RBI ⏬decreases the repo rate too much→ it can result in A) inflation and B) ⏬decrease in
the deposit interest rates offered by the bankers on savings account → middle-class and
pensioners affected negatively. (रेपो दर म� ब�त �ादा कटौती �ई तो नई सम�ाए खड़ी होंगी)

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 30

11.9 🐯🐯🐯🐯📈📈US FED TAPERING & IMPACT ON INDIA

2021: USA inflation at 6.2% (highest in 30 years). It may have following negative impact for India

− 😥😥 1) US Feds will ⬆ repo to combat American inflation. US Feds will reduce bond purchase
program (=Fed-Tapering) → ⏫loan interest rates in India → Foreign Portfolio Investors
(FPI-i.e. who invest upto 10% in a single Indian company’s shares)- those FPIs may pullout
money from India to give it as loans in American market → Indian share market ⬇. → Indian
investors also lose money → Indian investors flock towards gold, real-estate & cryptocurrency
for better returns → new set of problems related to tax evasion.
− 😥😥 2) When FPI pullout money from Indian sharemarket → Rupee weakens →⬆ imports
become more expensive →⬆ inflation → RBI forced to ⬆ repo to combat inflation =
expensive loans will harm India’s post-Corona economic revival.
− 😥😥3) Imported goods / services from USA to become expensive for India=”imported inflation”.
(अमरीका म� महँ गाई/मुद्रा���त �पछले 30 वष� म� सबसे �ादा अ�धक पाई गई है इससे लड़ने के �लए अमे�रक� क� द्रीय ब�क जो क़दम
उठाएगी उसके प�रणाम��प �वदेशी पोटर्फो�लयो �नवेशक- भारतीय शेयर बाज़ार से भाग जाएं गे। �जससे भारतीय �पया कमज़ोर
होगा,भारत म� क�ा तेल और अ� आयात महँ गे होंगे, िफर भारत म� भी महँ गाई दर बढ़ेगा। उस भारतीय महँ गाई से लड़ने के �लए भारतीय
�रज़वर् ब�क लोन क� �ाज दर महँ गे करेगी तो कोरोना प�ात भारतीय अथर्�व�ा को पुनज��वत करने म� सम�ा/िद�त� आ सकती है)

11.10🐯🐯🐯🐯🐯🐯 MONETARY POLICY: QUALITATIVE TOOLS (गुणा�क साधन)

✋Nothing noteworthy beyond what we studied in Win20 and Win21. Qualitative tools are:

1. � Moral Suasion (नै�तक दबाव / सलाह) & Publicity (प्रचार)

2. �🚯🚯 Direct Action (सीधी कायर्वाही: �ोिक लातो के भुत बातो से नहीं मानते)

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 31

 3. 💍💍 Margin Requirements / Loan to Value (LTV) (सीमा अ�नवायर्ता)
4. 🐯🐯🐯🐯🐯🐯 Priority Sector Lending (PSL: प्राथ�मकता �ेत्र के �लए ऋण मानक)

11.11📢📢 BI-MONTHLY MONETARY POLICIES- A SUMMARY TABLE

Upto Feb-2020 - ✅ already Covered in Mrunal’s Win20 Series Handout

Upto 2021-Feb - ✅ already Covered in Mrunal’s Win21 Series Handout
11.11.1 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2021 update(दरों म� कोई बदलाव नहीं)
⇒ No changes in rates & stance. Repo rate 4%, Reverse Repo rate 3.35%, MSF 4.25%,
Accommodative Stance. (�रज़वर् ब�क क� दरों म� कोई बदलाव नहीं)
⇒ Payment Bank: Before: They can’t accept more than ₹1 lakh per depositor. After: balance limit
increased to ₹2 lakh rupees/ per depositor. (More in 📑📑Pillar#1B1: Classification)
⇒ Centralized Payment Systems (CPS), viz- RTGS and NEFT – Direct Membership allowed to
Non-Bank payment system operators e.g. Phonepe, Amazonpay etc. (More in 📑📑Pillar#1A1)
⇒ Interoperability & cash withdrawal ki technical guidelines released But NOT greatly important
for Exam#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो . (Ref in 📑📑#1A1)

11.11.2 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2021 update (दरों म� कोई बदलाव नहीं)

⇒ No changes in. Repo rate 4%, Reverse Repo rate 3.35%, MSF 4.25%, Accommodative Stance.
⇒ On-tap Liquidity Window for Contact-intensive sectors such as hotel, tourism, beauty parlours

11.11.3 🐯🐯🐯🐯🐯🐯Monetary Policy: Aug-2021 update (दरों म� कोई बदलाव नहीं)

⇒ No changes in key rates or Stance. Repo unchanged @4% so Automatically MSF@4.25 and
RR@3.35%. Stance: Accommodative
⇒ one MPC member Prof. Jayanth Varma voted against the Accommodative stance. He believes
that repo needs to be increased in future to combat inflation. But the majority voted in favor of
the continuing Accommodative Stance with 4% Repo. (हालांिक एक सद� ने �वरोध म� वोट डाला िक हमने
भ�व� म� रेपो दरों को महंगी करनी चािहए तािक महंगाई से लड़ा जा सके , लेिकन ब�म�त मतानुसार रेपो दर म� बढ़ोतरी नहीं �ई)
⇒ Announced to absorb over Rs.4 lakh crores via Variable Rate Reverse Repo (VRRR)

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 32

⇒ We'll continue to do GSAP, Op-Twist and open market operations (OMOs) depending on the
situation/requirement of the economy.
⇒ ✋NOT IMP: MSF some technical rules changed.

11.11.4 🐯🐯🐯🐯🐯🐯Monetary Policy: Oct-2021 update (दरों म� कोई बदलाव नहीं)

No changes in key rates or Stance. Repo unchanged @4% so Automatically MSF@4.25 and
RR@3.35%. Stance: Accommodative

Transaction limit BEFORE AFTER

IMPS (एक बारी म� िकतना भुगतान कर सकते ह� उसक� मयार्दा म� बदलाव) Rs.2 lakh Rs.5 lakh
⇒ Immediate Payment Service (IMPS) of National Payments Corporation of India (NPCI):
Transaction limit increased, to encourage digital economy
⇒ NBFCs will be required to set up the Internal Ombudsman within their office. This will help
reduce the workload of RBI's own NBFC-Ombudsman. (गैर ब�क �व�ीय सं �ानों ने आंत�रक �शकायत �नवारण
अ�धकारी क� �नयु�� करनी होगी) (More about NBFCs 📑📑Pillar#1B1- Classification)

11.11.5 🐯🐯🐯🐯🐯🐯Monetary Policy: Dec-2021 update (दरों म� कोई बदलाव नहीं)

No changes: Repo unchanged @4% so MSF@4.25 and RR@3.35%. Stance: Accommodative

Transaction limit BEFORE AFTER

UPI based Apps’ transaction limits for the A) Retail Direct Scheme for Rs.2 lakh Rs.5 lakh
investment in G-secs and B) initial public offering (IPO)
- RBI allowed offline mode of payments using cards, wallets or mobile devices upto Rs.200 per
transaction (ref:1A1)

11.11.6 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2022 update (दरों म� कोई बदलाव नहीं)

No changes: Repo unchanged @4% so MSF@4.25 and RR@3.35%. Stance: Accommodative

- RBI to use variable rate repos (VRRs) and variable rate reverse repos (VRRRs) as the main
liquidity management tools.
- Extended the deadlines for various On-Tap liquidity window schemes to help bankers to give
loans to Healthcare (₹50,000 crore) and Contact-intensive Sectors (₹15,000 cr)
- NPCi’s E-Rupi Prepaid Digital Voucher: 1) max limit ⏫from ₹10,000 to ₹1 lakh 2) Before:
Single Use → After: Multi-use (until balance exhausted) So, E-rupi vouchers can be used more
than once (until the amount of the voucher is completely redeemed). (More in 📑📑Pillar#1A1)
- Voluntary Retention Route (VRR-2019) is a scheme for long-term bond investment by Foreign
Portfolio Investors (FPIs) in debt securities issued by the government and the corporates. RBI
relaxed some norms in 2022-Feb. (More in 📑📑Pillar#3A)
- ⚾📻📻⚾🎙🎙✋ Trade Receivables Discounting System (TReDS) & (NPCI)’s “National
Automated Clearing House (NACH)” integration related technical norms.

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 33

- ⚾📻📻⚾🎙🎙✋CRR’s automated sweep-in and sweep-out (ASISO): some technical reforms.
Not important for our exam, you’re free to waste your time learning from this video:
https://youtu.be/q-GNbExdTlA?t=2094

11.12�📡📡MRUNAL’S ECONOMY COURSE FOR UPSC PRELIMS & MAINS

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⇒ Recording available, if class missed
⇒ Access via Mobile, Tablet, Laptop!
⇒ Weekly Quiz with RANKING
💬💬Course Medium (मा�म)
⇒ Teaching: English + Hindi
⇒ PPT & PDF: English. With important terminologies in Hindi to save time of
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11.12.1 🔠🔠 Mock Questions for Prelims

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11.12.2 �🎺🎺🎺🎺1⃣✋ Mock Questions for UPSC Mains/GSM3 (250 words)

1) Give an account of the steps undertaken by RBI to revive the Indian economy from Corona
pandemic. कोरोना से भारतीय अथर्�व�ा को पुनज��वत करने के �लए आरबीआई द्वारा उठाए कदमो का �ववरण दी�जए।
2) Enumerate the steps taken by the RBI under the Atma Nirbhar Bharat initiative.
आ��नभर्र भारत अ�भयान के अंतगर्त आरबीआई द्वारा उठाए गए कदमो क� सूची दी�जए।
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📑📑NEXT HDT: Pillar1B- Classification of Banks and NBFCs, NPA & other Burning Issues in
Banking Sector

Mrunal’s Economy Win21 Series Pillar#1A2: Monetary Policy → Page 34