RBI Monetary Policy Highlights: The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) has unanimously decided to keep the repo rate unchanged at 6.5 per cent. The MPC has also decides to remain focused on the withdrawal of the accommodative stance, Das said while announcing the RBI MPC meet 2024 decisions.
The repo rate is the rate of interest at which RBI lends to other banks. The benchmark interest rate was last raised in February 2023 to 6.5 per cent from 6.25 per cent.
The RBI conducts six bimonthly meetings in a financial year to deliberate interest rates, money supply and inflation outlook.
Following the Interim Budget by Finance minister Nirmala Sitharaman on 1 February, 2024, the February MPC holds even more significance as it is the final one for the current financial year.
Here are the Top 10 key takeaways from RBI Governor Shaktikanta Das’ speech:
1. India’s potential growth is propelled by structural drivers. Growth is accelerating and outpacing most analysts’ forecasts. Global growth expected to remain steady in 2024, said Das.
2. RBI projects real GDP growth of 7% for FY’25 with risks evenly balanced. For FY24Q1 is projected at 7.2%; For FY24Q2 is projected at 6.8%; For FY24Q3 is projected at 7%; For FY24Q4 is projected at 6.9%.
3. Inflation is on a downward trajectory, says RBI Guv. Headline inflation moderated to 5.5% in April -December 2023, from 6.7% in FY23. Headline CPI inflation for FY24 is at 5.4%, with projection for FY24Q4, the current quarter at 4 5%.
4. Das raised concern on elevated debt. Elevated debt is raising serious concern in many countries, it will impact future global financial system, said Shaktikanta Das. On the domestic economic activity front, he added that the momentum remains strong and is expected to continue in FY25.
5. Review of regulatory framework for electronic trading platforms – A revised regulatory framework for electronic trading platforms will be issued for stakeholders feedback
6. Hedging of gold price risk in OTC market in IFSC – It is now decided to also allow resident entities to hedge the price of gold in the OTC segment in the IFSC
7. Key Fact Statement for retail & MSME loans and advances – To enhance transparency in disclosure of various charges fees, etc the RBI had mandated certain categories of lenders to provide the borrower a key fact statement (KFS) containing essential information as all inclusive annual percentage rate and details of recovery and grievance redress mechanism. The requirement of KFS is now being extended to cover all retail and MSME loans.
8. Enhancement of AePS- Proposed to streamline the process for onboarding of AePS service providers & introduce some additional fraud risk management measures.
9. Principle-based framework for authentication of digital payment transactions- To facilitate adoption of alternative authentication mechanisms for enhancing security of digital payments, proposed to put in place a principal-based framework for authentication of such transactions.
10. Introduction of programmability and offline functionality in CBDC pilot projects – Its now proposed to enable additional functionalities of programmability and offline capability in CBDC retail payments