~Shrishti Sharma
The Monetary Policy Committee (MPC) has once again maintained its ‘withdrawal of accommodation’ stance in its bi-monthly policy decisions, keeping the repo rate unchanged for the 8th consecutive time at 6.5%.
This decision aims to balance inflation and economic growth, maintaining a 4% CPI inflation target within a range of +/- 2%.
Regulatory developments include revising the limit for bulk deposits to “Single Rupee term deposits of ₹3 crore and above” for Scheduled Commercial Banks (excluding Regional Rural Banks) and Small Finance Banks. For Local Area Banks, the limit is set to “Single Rupee term deposits of ₹1 crore and above.” Additionally, the e-mandate framework has been expanded and the FEMA Act 1999 is expected to be simplified.
MPC Meet June 2024: Key Decisions
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In response to the Monetary Policy Statement by RBI Governor Shaktikanta Das, leaders from various banks have expressed their thoughts on the decisions and insights shared.
Dinesh Khara of SBI appreciates the favorable inflation outlook and fraud prevention technologies while Sanjay Agarwal of AU Small Finance Bank is optimistic about the GDP growth forecast revision and macro-financial stability. Ajay Kumar Srivastava of Indian Overseas Bank at the same time welcomed the repo rate decision and e-mandate extensions. Alok Singh of CSB Bank emphasised improvements in digital payments, while Manish Kothari of Kotak Mahindra Bank reflected on the balanced approach to inflation and growth. Read below:
Dinesh Khara, Chairman, State Bank of India
The RBI’s policy upgrade confirms India’s robust post-pandemic growth, with inflation falling below 4% in Q2. The “Digital Payments Intelligence Platform” will enhance fraud prevention using advanced technologies. Increasing the bulk deposit limit from ₹2 crores to ₹3 crores will improve asset-liability management for ASCBs, reducing interest rate sensitivity.
ALSO READ: RBI MPC’s key announcements: Bulk deposits limit to e-mandate framework
Manish Kothari, President & Head – Commercial Banking, Kotak Mahindra Bank
The RBI’s focus on aligning inflation with its 4% target led to unchanged policy rates and a stance on withdrawing accommodation. The inflation-growth balance is improving, though food inflation remains high. A normal monsoon and stable global commodity prices could prompt a rate cut. For now, the RBI’s approach emphasises, ‘Poise, Patience & Perseverance’.
Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank
The RBI’s 20 bps GDP growth forecast revision to 7.2% and maintaining a 4.5% CPI inflation forecast boosts confidence. Maintaining the monetary policy status quo supports India’s macro-financial stability amid global uncertainties. A good monsoon in 2024 should bolster the rural economy, and the bulk deposit threshold increase to ₹3 crores is a practical step for mobilizing retail deposits.
Ajay Kumar Srivastava, Managing Director & CEO, Indian Overseas Bank
We welcome the RBI’s decision to keep the repo rate at 6.5% and maintain a 7.2% GDP growth forecast for FY24. The focus on withdrawing accommodation balances economic growth and inflation control. Extending e-mandates for Fastags, introducing auto-replenishment for UPI Lite wallets, and establishing a digital payments intelligence platform will strengthen the banking sector.
Alok Singh, Group Head-Treasury, CSB Bank
The RBI’s policy stance is justified given global and local factors. While we anticipated liquidity measures, the RBI may wait for OMOs results. Continued efforts to improve digital payments are promising for the future and will enhance the RBI’s global presence.
