As expected, the RBI MPC kept policy rates unchanged and maintained its accommodative stance in the June policy. It lowered the FY22 growth projection to 9.5% YoY from 10.5% earlier to account for the impact of the second COVID wave on economic recovery. In this context, the central bank continued to focus on growth revival and announced targeted policy steps to provide relief to the more affected segments. Accordingly, the RBI expanded the coverage of the resolution framework 2.0 to include a larger number of small borrowers, introduced an on-tap liquidity window for certain contact intensive sectors, and provided additional liquidity support to SIDBI for on-lending to MSMEs. The RBI also announced G-SAP 2.0 with a higher quantum for Q2 FY22 compared to Q1 FY22, which is likely to support governments’ borrowing programme while also helping with an ordering evolution of the yield curve.
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