RBI keeps repo rate at 6.50%, cuts CRR to 4%
On 6 December 2024, in India, the RBI's Monetary Policy Committee kept the repo rate unchanged at 6.50%, and the RBI cut the cash reserve ratio by 50 basis points to 4.0% in two tranches.
Summary
On 6 December 2024, in India, the Reserve Bank of India's Monetary Policy Committee, which met on 4-6 December, decided by a 4-2 majority to keep the policy repo rate unchanged at 6.50% and unanimously retained the 'neutral' stance. The RBI cut the cash reserve ratio (CRR) of all banks by 50 bps in two tranches of 25 bps each to 4.0% of NDTL, from the fortnights beginning 14 and 28 December 2024, releasing about Rs 1.16 lakh crore of liquidity. Real GDP growth for 2024-25 was projected at 6.6% and CPI inflation at 4.8%, and the limit for collateral-free agriculture loans was raised from Rs 1.6 lakh to Rs 2 lakh per borrower.
Key facts
- Date
- 6 Dec 2024 (MPC met 4-6 Dec)
- Repo rate
- Unchanged at 6.50% (4-2 vote)
- Stance
- Neutral (unanimous)
- CRR
- Cut 50 bps to 4.0% in two tranches (14 & 28 Dec)
- Liquidity released
- About Rs 1.16 lakh crore
- Projections 2024-25
- GDP 6.6%, CPI inflation 4.8%
- Collateral-free agri loans
- Rs 1.6 lakh to Rs 2 lakh
Practice MCQs 5 questions
At what level did the RBI's Monetary Policy Committee keep the policy repo rate on 6 December 2024?
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Correct answer: B — 6.50%
RBI Governor's Statement (6 Dec 2024): the MPC decided by a 4 to 2 majority to keep the policy repo rate unchanged at 6.50 per cent; the SDF rate remains 6.25% and the MSF rate and Bank Rate 6.75%.
To what level did the RBI decide on 6 December 2024 to reduce the cash reserve ratio (CRR) of banks?
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Correct answer: D — 4.00% of NDTL
RBI (6 Dec 2024): the CRR of all banks is reduced by 50 bps in two equal tranches of 25 bps each to 4.0 per cent of NDTL, from the fortnights beginning December 14 and December 28, 2024, releasing about Rs 1.16 lakh crore.
What real GDP growth did the RBI project for 2024-25 in its policy of 6 December 2024?
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Correct answer: A — 6.6%
RBI Governor's Statement (6 Dec 2024): real GDP growth for 2024-25 is now projected at 6.6 per cent, with Q3 at 6.8 per cent and Q4 at 7.2 per cent.
On 6 December 2024, the RBI raised the limit for collateral-free agriculture loans to how much per borrower?
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Correct answer: C — Rs 2 lakh
RBI Governor's Statement (6 Dec 2024): the limit for collateral-free agriculture loans, last revised in 2019, is increased from Rs 1.6 lakh to Rs 2 lakh per borrower.
Consider the following about the RBI MPC decision of 6 December 2024: 1. The decision to keep the repo rate unchanged was taken by a 4 to 2 majority. 2. The MPC changed its stance from 'neutral' to 'accommodative'. Which of the statements given above is/are correct?
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Correct answer: A — 1 only
Only statement 1 is correct. RBI (6 Dec 2024): the MPC decided by a 4 to 2 majority to keep the repo rate at 6.50 per cent and decided unanimously to continue with the 'neutral' stance.