{"id":43887,"date":"2024-12-07T11:41:55","date_gmt":"2024-12-07T06:11:55","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=43887"},"modified":"2025-05-06T06:33:47","modified_gmt":"2025-05-06T01:03:47","slug":"key-highlights-of-recent-rbi-announcements","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/key-highlights-of-recent-rbi-announcements\/","title":{"rendered":"Key Highlights of Recent RBI Announcements"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in the News?<\/li>\n<li>Key Highlights of Recent RBI Announcements<\/li>\n<li>Key Economic Terms<\/li>\n<\/ul>\n<h2><strong>Why in the News?<\/strong><\/h2>\n<ul>\n<li>In line with expectations, the Reserve Bank of India (RBI) has lowered the cash reserve ratio (CRR) by 50 basis points (bps) to 4 per cent to boost liquidity in the financial system.<\/li>\n<\/ul>\n<h2><strong>Key Highlights of Recent RBI Announcements<\/strong><\/h2>\n<ul>\n<li><strong>Cash Reserve Ratio (CRR) Reduction and Monetary Policy Updates:<\/strong>\n<ul>\n<li>The RBI has reduced the <strong>CRR<\/strong> by 50 basis points in two tranches, bringing it to 4%.<\/li>\n<li>This move aims to inject \u20b91.16 lakh crore into the banking system, addressing liquidity stress caused by factors like tax outflows and increased currency in circulation.<\/li>\n<li>The <strong>repo rate<\/strong> remains unchanged at 6.5% for the 11th consecutive time, aligning with the neutral monetary policy stance amidst rising inflation and economic uncertainties.<\/li>\n<li>Inflation forecast for FY2025 has been revised to 4.8% (from 4.5%), while GDP growth estimates were lowered to 6.6% (from 7.2%), reflecting slower economic activity and high inflation&#8217;s impact on consumer demand.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Introduction of MuleHunter:<\/strong>\n<ul>\n<li>RBI introduced <strong>MuleHunter<\/strong>, an Artificial Intelligence and Machine Learning-based infrastructure developed by the Reserve Bank Innovation Hub (RBIH) to combat digital fraud through mule bank accounts.<\/li>\n<li>The system aggregates data from banks and payment operators, using AI to identify and mitigate frauds effectively.<\/li>\n<li>It offers small banks without advanced fraud detection systems a robust tool to prevent financial crimes.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Enhancements in FCNR(B) Deposits:<\/strong>\n<ul>\n<li>Interest rate ceilings on <strong>Foreign Currency Non-Resident Bank [FCNR(B)] deposits<\/strong> have been increased to attract higher capital inflows. New ceilings:<\/li>\n<\/ul>\n<\/li>\n<li>For 1\u20133 years maturity: Overnight ARR + 400 basis points.<\/li>\n<li>For 3\u20135 years maturity: Overnight ARR + 500 basis points.\n<ul>\n<li>This measure aims to strengthen foreign currency inflows and is effective until March 31, 2025.<\/li>\n<\/ul>\n<\/li>\n<li><strong>UPI-Based Credit Lines:<\/strong>\n<ul>\n<li>RBI now allows <strong>Small Finance Banks (SFBs)<\/strong> to offer pre-sanctioned credit lines via UPI, following its introduction by Scheduled Commercial Banks in September 2023.<\/li>\n<li>This initiative is expected to boost financial inclusion and formal credit access, particularly for first-time borrowers.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Key Economic Terms<\/strong><\/h2>\n<ul>\n<li><strong>Cash Reserve Ratio (CRR):<\/strong>\n<ul>\n<li>The percentage of a bank\u2019s net demand and time liabilities (NDTL) that it must hold as reserves with the RBI.<\/li>\n<li>Lowering the CRR releases liquidity into the banking system, enabling more lending.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Repo Rate:<\/strong>\n<ul>\n<li>The interest rate at which the RBI lends short-term funds to banks. It influences borrowing costs across the economy.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Net Demand and Time Liabilities (NDTL):<\/strong>\n<ul>\n<li>The total deposits held by a bank, including savings, current, and fixed deposits, minus liabilities like loans and advances.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Consumer Price Index (CPI):<\/strong>\n<ul>\n<li>Measures changes in retail prices of goods and services, indicating inflation levels.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Mule Bank Accounts:<\/strong>\n<ul>\n<li>Fraudulent accounts used to transfer illicit funds, often involving unsuspecting account holders.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Foreign Currency Non-Resident Bank [FCNR(B)] Deposits:<\/strong>\n<ul>\n<li>Bank accounts where NRIs can deposit earnings in foreign currencies, protecting them from currency fluctuations.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Alternative Reference Rate (ARR):<\/strong>\n<ul>\n<li>A benchmark interest rate used globally to set loan and deposit rates in various currencies.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Basis Points (bps):<\/strong>\n<ul>\n<li>A unit equal to 0.01%. For example, 100 bps equals 1%.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q1 What is United Payments Interface (UPI)?<\/strong><\/h3>\n<p>Unified Payments Interface (UPI) is a real-time payment system in India. It allows users to transfer money between bank accounts instantly and for free using a mobile device. UPI was designed and launched by the National Payments Corporation of India (NPCI) in 2016.<\/p>\n<h3><strong>Q2 What is the repo rate?<\/strong><\/h3>\n<p>The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks and financial institutions.<\/p>\n<p><strong>News:<\/strong> <a href=\"https:\/\/www.business-standard.com\/markets\/capital-market-news\/rbi-raises-interest-rate-ceiling-on-fcnr-deposits-124120600548_1.html\" target=\"_blank\" rel=\"nofollow noopener\">RBI raises interest rate ceiling on FCNR deposits<\/a> | <a href=\"https:\/\/www.thehindu.com\/business\/rbi-unveils-mulehunter-to-prevent-digital-frauds\/article68954842.ece#:~:text=The%20Reserve%20Bank%20of%20India,the%20use%20of%20mule%20accounts\" target=\"_blank\" rel=\"nofollow noopener\">Hindu<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Monetary Policy Committee is responsible for fixing the benchmark interest rate in India.<\/p>\n","protected":false},"author":5,"featured_media":43888,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-43887","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/43887","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=43887"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/43887\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/43888"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=43887"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=43887"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=43887"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}