~ Samriddhi Singh Mahar
Shaktikanta Das announced the RBI’s decision to keep the repo rate unchanged at 6.5% for the tenth consecutive time in the recent Monetary Policy Committee meeting, shifting to a neutral stance from an accommodative one.
The GDP growth forecast for this financial year remains at 7.2%, with growth projections for the upcoming quarters of FY25 and Q1 FY26 also outlined during the address.
| Repo Rate | 6.5% |
| FY25 GDP Growth Forecast | 7.2% |
| FY26 Q1 Real GDP Growth | 7.3% |
| CPI Inflation | 4.5% |
| Marginal Standing Facility (MSF) | 6.75% |
| Standing Deposit Facility (SDF) | 6.25% |
The top bankers of the industry believe that the RBI’s neutral stance shows confidence in India’s growth and easing inflation. They believe it is an affirmative front loaded policy, which also serves as a precursor to rate cuts.Here’s what they said:
CS Setty, SBI Chairman
The RBI policy statement is a clear recognition of robust growth and an inflation trajectory that is trending down. The shift in stance to neutral is an affirmative front loaded policy move that will ensure RBI remains nimble footed to align inflation with the 4% target. The enhancement of limits under UPI is a testimony to the continuous innovation in India’s digital infrastructure. The creation of the RBI climate risk information system will standardise datasets related to climate and bring them at one platform. This repository will also help the regulated entities to fine tune their transition risk assessment models.
Zarin Daruwala, CEO – India and South Asia, Standard Chartered Bank
The status quo on the repo rate is in line with expectations and the decision is backed by solid economic growth projections (FY25 projected at 7.2%). The change in monetary stance to neutral, stemmed from the MPC’s confidence in reining inflation within its target range. This should also bring cheer to the markets as it is likely to serve as a precursor to rate cuts.
Manish Kothari, Head – Commercial Banking, Kotak Mahindra Bank Limited
RBI Governor “walks the talk” on managing inflation as their key priority, yet again! Hence, the policy rate was kept unchanged, although the stance was changed to Neutral. His oft repeated statement was, “unambiguously focused on durable alignment of inflation with target, while supporting growth”; signaling clearly that any future rate cut would depend upon the inflation trajectory trending downwards. The Governor’s comfort for the change in stance seemingly stemmed from India’s growth story remaining intact; with private investment & consumption as well as Govt capex expected to pick up in H2, a stronger kharif output & rabi sowing due to a good monsoon lending to a pick-up in rural demand, and a resilient CAD & forex position keeping the INR steady. Hence, he retained the current year GDP growth target at 7.2%, while mentioning that adverse weather conditions and/or accentuated geopolitical conflicts could lead to downside risks for the economy.
Pralay Mondal, MD & CEO, CSB Bank.
Monetary policy stance change to Neutral is a welcome move as it may alleviate some stress in the deposit space. Keeping the repo unchanged among geopolitical uncertainties is very prudent. Account recognition facilities on money transfer will certainly help curb prevent any misuse of account by fraudsters. Overall the stance is appropriate with evolving local and global conditions.
