Monetary Management and Financial Intermediation

Monetary Policy

Repo rate was cut by 110 basis points in four consecutive MPC (Monetary Policy Committee) meetings in the financial year due to slower growth and lower inflation.

• In 2019-20, liquidity conditions were tight for initial two months; but subsequently it remained comfortable.

The Gross Non Performing Advances Ratio

Remained unchanged for Scheduled Commercial banks at 9.3% between March and September 2019.

• Increased slightly for the Non-Banking Financial Corporations (NBFCs) from 6.1% in March 2019 to 6.3% in September 2019.

Credit Growth

The financial flows to the economy remained constrained as credit growth declined for both banks and NBFCs.

• Bank Credit growth (YoY) moderated from 12.9% in April 2019 to 7.1% as on December 20, 2019.
• Capital to Risk-weighted Asset Ratio of SCBs increased from 14.3% to 15.1% between March 2019 and September 2019.