In a comprehensive address on June 7, RBI Governor Shaktikanta Das unveiled the outcomes of the latest Monetary Policy Committee (MPC) meeting, covering a wide array of critical economic indicators and strategic measures.
From raising the GDP growth forecast to 7.2% for FY25 to maintaining policy rates at 6.5%, the announcements span inflation projections, surplus transfers, and innovative initiatives like a new digital payments intelligence platform.
Here’s a detailed look at all the significant updates from the June MPC:
1. GDP Growth Forecast:
– The GDP growth forecast has been raised to 7.2% for FY25, up from the earlier projection of 7%.
– Quarterly projections are as follows:
– Q1: 7.3% (up from 7.1%)
– Q2: 7.2% (up from 6.9%)
– Q3: 7.3% (up from 7%)
– Q4: 7.2% (up from 7%)
2. Policy Rates:
– The MPC decided by a 4:2 majority to keep the policy rates unchanged at 6.5%.
– The committee remains focused on the withdrawal of accommodation.
3. Inflation Projections:
– The inflation projection for FY25 has been retained at 4.5%.
– Governor Das highlighted that Q2 FY25 might see some softness in inflation, but spillover risks remain in the latter half of the fiscal year.
– The need to monitor food price inflation closely was emphasized, given the risks of it spilling over to headline inflation.
4. Surplus Transfer and Reserve Buffer:
– The RBI will transfer ₹2.11 lakh crore as surplus to the government for FY24.
– The central bank has decided to maintain a contingent reserve buffer of 6.5% at the upper limit to strengthen its balance sheet.
5. Foreign Portfolio Investment:
– FY24 saw a significant surge in Foreign Portfolio Investor (FPI) flows, with an inflow totaling $41.6 billion.
– While gross Foreign Direct Investment (FDI) remained robust, net FDI moderated.
6. Regulated Entities and Fees:
– The RBI identified that some regulated entities are charging fees without proper disclosures and plans to address this issue.
– Further steps will be taken to moderate unsecured loans and advances.
7. Bulk Deposits:
– The RBI proposed revising the definition of bulk deposits as single rupee term deposits of ₹3 crore and above for scheduled commercial banks and small finance banks.
– For local area banks, the bulk deposit limit is proposed to be ₹1 crore and above.
8. Export and Import Guidelines:
– The RBI plans to rationalize the guidelines for exports and imports of goods and services under FEMA to promote ease of doing business and provide greater operational flexibility to authorized dealer banks.
– Draft guidelines will be issued shortly.
9. Digital Payments Intelligence Platform:
– A digital payments intelligence platform is to be established for network-level intelligence and real-time data sharing across the digital payments ecosystem.
– A committee has been constituted to examine various aspects of setting up this platform.
10. E-mandate Framework Enhancements:
– Inclusion of recurring payments auto-replenishment facility under the e-mandate framework to include payments such as replenishment of balances in Fastag and NCMC.
– Introduction of auto-replenishment of UPI Lite wallets under the e-mandate framework.
11. Harbinger 2024 – Innovation for Transformation:
– The third edition of the global hackathon with themes focusing on zero financial frauds and being Divyang-friendly will be launched shortly.
These announcements by the RBI are set to impact various sectors, providing a clear direction for economic policies and emphasizing the central bank’s commitment to maintaining financial stability and supporting growth.
