Reserve Bank of India Current Affairs - 2019

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Kerala govt gets RBI’s nod for formation of Kerala Bank

The Reserve Bank of India (RBI) has given its final nod to Kerala Government for the formation of Kerala Bank. The final nod by RBI was subjected to certain conditions. RBI’s approval is valid only till 31 March 2020.

Key Highlights

The proposed Kerala Bank would be formed by merging 13 District Co-operative Banks (DCBs) with Kerala State Co-operative Bank. With its formation, the proposed Kerala Bank will be the largest banking network in the state.

The setting up of new bank would also be in accordance with final verdict of some cases pending before a court in this regard.

As per the state government the objective behind formation of Kerala Bank was to strengthen cooperative sector. However it is also suspected that the move would destroy the traditional cooperative sector.

RBI cuts Repo Rate

RBI today released its 4th bi – monthly policy review.

  • The Reserve Bank of India cut repo rate by 25 base points to 5.15%. It is the lowest since 2010. This is the fifth consecutive rate cut of the Shaktikanta Das led panel.
  • The RBI also cut GDP growth estimates to 6.1% from earlier 6.9%

All the members of the MPC – Monetary Policy Committee unanimously voted to reduce the repo rate. Last month Government cut the corporate tax rate from 30% to 22% to revive the slow growth rate.

Repo rate

Repo rate is the rate at which the central bank lends money to the commercial banks. With RBI cutting repo rate, inflation would increase in the future. The current inflation of India is 3.21%. This is below the RBI target of 4%.