InvestorQ : Is it true that the RBI also made some very important announcements in the monetary policy apart from the regular stuff on liquidity and rates?
Tisha Malhotra made post

Is it true that the RBI also made some very important announcements in the monetary policy apart from the regular stuff on liquidity and rates?

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Aashna Tripathi answered.
4 weeks ago
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The policy, not surprisingly, goes a lot beyond traditional measures like liquidity, rates etc. It also has a lot of policy changes to note and many of them are very critical from a routine perspective.

a) The Operation Twist is now going to be much wider. TLTRO on-tap liquidity scheme, which originally started for the stressed segments identified by Kamath Committee, has been extended to non banking finance companies or NBFCs too.

b) With the pandemic under control relatively, it was time to restore the CRR back. CRR will be restored to 3.5% of NDTL from 27-Mar and to 4.0% from 22-May. The CRR had been cut by 100 bps to ease liquidity pressure but now that is being reversed for stability.

c) To encourage banks to lend to MSMEs in the mid sized segment, now the banks can deduct loans given to MSMEs from the calculation of net demand and time liabilities or NDTL for reserve calculations. This will likely give a boost to MSME lending.

d) The Liberalized Remittance Scheme or LRS applicability was broadened in the policy with resident Indians being allowed to remit money to IFSCs under this scheme. This will help the investors to diversify the risk in their portfolios.

e) For a long time, there was the demand to allow retail investors to directly invest in the G-Secs and procure it directly from RBI. Now, retail investors will be allowed to invest in government securities by opening an account directly with the government treasury. This eases the process and also gives greater confidence to the bond investors.

f) In 2010, the cheque truncation system or CTS was introduced as the standard protocol which simplified and made cheque clearance quicker. Now for speedy coverage, the CTS list will be enhanced by another 19,000 branches so that over the next six months or so all the potential branches are in CTS.

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