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Win24 1a2 Rbi MPC Icrr Repo Mrunal
Win24 1a2 Rbi MPC Icrr Repo Mrunal
Table of Contents
SBI launched Green FD with tenure with three tenures — (A) 1,111, (B) 1,777 and (C) 2,222
days.
If such bank/NBFC unable to find green-borrower in immediately (for giving long term loans)
→ then bank/NBFC can invest such green deposit money into liquid instruments with
maximum maturity upto one year e.g. T-Bill, Commercial Papers etc. (Ref Pillar1C theory for
more.)
If such bank/NBFC accepted green deposit but can’t find green-borrowers, then RBI will not
penalise bank/NBFC for it.
These deposits are covered by Deposit Insurance and Credit Guarantee Corporation (DICGC).
So even if the bank fails/shuts down → depositor will get upto ₹5 lakh refunded by DICGC.
Green deposits must be issued/accepted in rupee currency.
it is not compulsory every Bank/NBFC to raise/accept green deposits. Unki marzi hai. (just like it
is not compulsory for every automobile company to launch a E-Vehicle.)
- If deposits remain unclaimed for 10 years in a bank → banker need to transfer it to “Depositor
Education and Awareness FUND” (DEA) OF RBI.
- 2023: RBI setup UDGAM portal for it. (Unclaimed Deposits Gateway To Access inforMation)
- Beneficiary can easily search unclaimed deposits across multiple banks at one place. (e.g. by
searching the Aadhaar card / PAN Card number of the dead parent etc.)
- How it works in real life? NOTIMP4EXAM. You can satisfy your curiosity by
visiting https://udgam.rbi.org.in/unclaimed-deposits/#/login
FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT 2003 (राजकोषीय उत्तरदायित्व और बजट
प्रबं धन कानून ) Notable provisions:
• Government has to control its fiscal deficit within X% of GDP. (Ref: Pillar#2D) (सरकार ने
अपने घाटे को GDP के कु छ प्रतिशत से ज़्यादा नहीं बढ़ने देना होगा.)
• Government CANNOT borrow from RBI. (In other words, RBI cannot buy
government’s loan instruments for itself from primary market) **Except in TWO
situations:**
• i) Short term Ways and Means Advances (WMA) (Ref: Pillar#1C)
• ii) During war, disaster, agri-crisis, big fall in GDP. (Ref: Pillar#2D)
• RBI can buy/sell government’s loan instruments from secondary market (i.e. from other
investors in OMO/ Open market operations.) (रिज़र्व बैंक आमतौर पे प्राथमिक बाज़ार से सरकार के लोन
कर्ज़ उपकरण नहीं ख़रीद सकती है, किं तु द्वितीयक बाज़ार ले रिज़र्व बैंक उसकी ख़रीद बिक्री कर सकती है. )
🙋🏼♀️FAQ: didn't understand this. Ans. Complete Pillar1C AND pillar2D ke PCB## lectures.
It means RBI printing more currency notes to give as loans to Government. (जब सरकार को उधार देने
के लिए रिजर्व बैंक नया पैसा छापती है)
However, this process is difficult/ not easy due to FRBM Act conditions learned above. (हालाँकि
FRBM क़ानून के चलते ये इतना आसान नहीं है अब.)
Net interest margin (NIM) is difference between Loan interest MINUS Deposit Interest Rate. An
NIM of 3–4% is considered healthy/good for bank’s profitability and growth.
Liquidity overhang refers to a situation in monetary policy where money supply is >> (higher)
than demand for money (loans). [जब मुद्रा आपूर्ति ज़्यादा और मुद्रा/लोन की माँग कम हो]
Result? Loan interest rates become cheaper. This could have negative consequences if there is a
problem of high inflation. (Because cheap loans → more shopping → more demand → inflation
problem worsens) (लोन सस्ते हो जाएँगे, और वे महंगाई की समस्या को जटिल बनायेंगे।)
2000 के नोट चलन हटाने के बाद बैंको में जो अतिरिक्त राशि जमा हुई उसमें
Policy Corridor also known as Liquidity Adjustment Facility (LAF) corridor. (नीति गलियारा / तरलता
सुविधा गलियारा)
BEFORE 2022-April: Policy Corridor = total width between: MSF <—> REPO <—> Reverse
Repo. (इन तीनों उपकरणों के बीच की कु ल चौड़ाई)
After 2022-April: Policy Corridor = MSF (Repo+0.25%) <—> REPO <—> SDF (Repo-0.25%)
Thus total width is 0.25+0.25= 0.50%
11.3.1 🐯📢📐 MonPolicy → Quant Tools → Variable Rate Reverse Repo (VRRR)
(Normal / Fixed)
Type variable rate reverse repo (VRRR)
Reverse Repo
Fixed by RBI. e.g. 3.35% Varies/changes depending on the
Interest Rate?
(2023) auction bids made by clients.
When RBI wants to
Objective? same as left cell.
reduce money supply
Can RBI reject accepting deposits Yes. Depends on RBI
same as left cell.
from clients in this window? discretion/mood
• VRRR is a special method thru which RBI conducts reverse repo rate deals with clients, via
auction. so exact % is not fixed. because % depends on the auction. (नीलामी से तय होता है रिवर्स रिपो
दर। असल में कै से होगा उसमे हम समय बर्बाद नहीं करेंगे)
• How exactly it works? = Technical details not imp.
• RBI conducted VRRR operations during 2023. So term came was in news.
As of 22th Feb 2024, Repo is still unchanged @6.50%. So I’ve not updated above graph.
- Between 2020 to 2023, the repo rate increased from 4% to 6.50% - consequently the EMI burden
increased for the external benchmark rate based loans.
So, RBI wants bankers to give option to borrower after every change in such floating interest loans:
A) Ability to RESET i.e. switch from floating (external) rate to fixed rate loans.
B) Foreclosure of loan. Meaning, full repayment of your remaining loan amount in one single
payment instead of paying multiple EMIs. Benefit? LESS burden of compound interest (byaaj-
pe-byaaj) in monthly instalments.
🙋🏼♀️FAQ: Will this not be misused by the borrower IF he RESETS his fixed/floating loan every
time it becomes unfavourable to him after change in REPO?
Ans. There will be ceiling/limits on how many times ‘reset’ can be done throughout the loan period.
RBI yet to issue guidelines. Further, real-life Phd not important.
Finally