Key Highlights of RBI Monetary Policy 2021: From Limit Increase to Credit Limit Increase

The Reserve Bank of India announced a series of changes to its monetary policy on Wednesday to encourage non-bank financial institutions such as mobile wallets and payment banks. For the fifth time in a row, the RBI left its key interest rate unchanged at 4%. The bank interest rate and the MSF interest rate also remain unchanged at 4.25%. The growth forecast for the current financial year is maintained at 10.5%. According to the report, a recent surge in COVID-19 infections has cast doubt on the economy and the focus should now be on containing the spread of the virus.

Key RBI monetary policy announcements:

liquidity facility

In line with the policy objective to support the growth momentum that is yet to emerge, it has been decided to provide AIFIs with new support of 50,000 crore for new loans in 2021-22.

Payment banks limit has been increased to Rs 2 lakh

The maximum balance at the end of the day has been increased from 1 lakh to 2 lakh per single customer. Now the customer can hold Rs 2 lakh in his payment bank account.

Banks for onward transfer through NBFCs

It has been decided to extend the PSL classification for bank lending to NBFCs for “on-lending” to the above sectors for six months, i.e. until September 30, 2021, to ensure continued availability of credit to these sectors and faster to help economic recovery.

Increase in the loan limit compared to eNWR/NWR

It is decided to increase the credit limit per borrower from 50 lakh to 75 lakh against pledging/mortgaging agricultural produce secured by NWRs/(e-NWRs) issued by WDRA registered warehouses.

Financial Inclusion Index

The FI Index is based on a range of factors and reflects the broadening and deepening of financial inclusion in the country. Initially, the FI Index is published annually in July for the fiscal year ending in March of the previous year.

RTGS and NEFT from non-banks

To encourage non-bank participation in payment schemes, it is proposed that operators of payment schemes regulated by the Reserve Bank would gradually be allowed to join CPS directly.

Interoperability of prepaid payment instruments

The Reserve Bank of India has stressed the importance of interoperability between issuers and acquirers, whether banked or non-banked. As a result, it is proposed that full KYC PPI and the entire acceptance infrastructure will require interoperability. To encourage the migration of PPIs to full-KYC, it is proposed to increase the outstanding balance limit on such PPIs from Rs 1 lakh to Rs 2 lakh.

allow cash withdrawals

Only full KYC PPIs issued by banks are allowed to withdraw cash, and this service is available through ATMs and PoS terminals. Now customers can withdraw cash from their digital wallets and prepaid cards.