RBI MPC Meeting 2023 Highlights: The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the third bi-monthly monetary policy for FY24 on Thursday. The three-day meeting of the six member Monetary Policy Committee (MPC) of RBI was held from August 8 to 10. The RBI kept the repo rate unchanged at 6.5% today. Since May 2022, the central bank has raised the repo rate by 250 basis points (bps).
RBI Policy Meeting Highlights: Check out key takeaways from RBI Policy
Here are key takeaways from RBI Policy:
Interest Rates:
– Repo rate unchanged at 6.5%
– Standing deposit facility (SDF) rate remains at 6.25%
– Marginal standing facility (MSF) rate and Bank Rate maintained at 6.75%
– CRR at 4.5%
GDP Projections:
Real GDP growth projection for FY224 retained at 6.5%
– GDP forecast for Q1FY24 at 8%
– GDP forecast for Q2FY24 at 6.5%
– GDP forecast for Q3FY24 at 6%
– GDP forecast for Q4FY24 at 5.7%
– GDP growth for Q1FY25 is projected at 6.6%
Inflation Forecast
– CPI inflation forecast for FY24 raised to 5.4% from 5.1%
– CPI inflation forecast for Q2FY24 raised to 6.2% from 5.2%
– CPI inflation forecast for Q3FY24 raised to 5.7% from 5.4%
– CPI inflation forecast for Q4FY24 retained at 5.2%
– CPI inflation forecast for April-June 2024 pegged at 5.2%
Liquidity Measures
All scheduled banks to maintain an incremental cash reserve ratio (I-CRR) of 10% on the increase in their net demand and time liabilities (NDTL) between May 19, 2023, and July 28, 2023.
Revision in IDF framework
The regulatory framework for Infrastructure Debt Funds (IDFs) has been revised.
The key changes in the revised framework are: (i) withdrawal of the requirement to have a sponsor for the IDFs, (ii) allowing IDFs to finance toll-operate-transfer (ToT) projects as direct lenders, (iii) permitting IDFs to raise funds through ECBs, and (iv) making tri-partite agreements optional for PPP projects.
On floating-interest loans
Proposal to put in place a transparent framework for reset of interest rates on floating-interest loans.
UPI
– To launch Conversational Payments on UPI
– Transaction limit of UPI Lite raised to ₹500 from ₹200
– To introduce offline payments using Near Field Communication (NFC) technology
RBI Policy Meeting Live: Policy Reaction – Suresh Khatanhar, MD and CEO, IDBI Bank
The RBI’s decision to keep the repo rate unchanged at 6.50% is in line with the inflationary trends that have been visible so far as well as those expected going forward. While global growth is expected to be muted this financial year it is encouraging that overall economic activity in the Indian context has been encouraging.
The RBIs commitment to firmly focus on aligning inflation to the target of 4% signals a benign interest rate scenario going forward. The decision to increase incremental CRR is only intended to absorb the surplus liquidity generated by various factors and is a temporary measure for managing the liquidity overhang and is not likely to impact liquidity in the system. Overall, by keeping interest rates intact for the third straight time, the RBI has signalled that the economy benefits and continues to grow.
RBI Policy Meeting Live: Policy Reaction – Achala Jethmalani, Economist at RBL Bank
The MPC’s decision is seen as a ‘hawkish pause’. The RBI tinkers with liquidity to align it with the current monetary policy stance to enhance transmission of prior hikes.
Upward revision in inflation forecasts while watching any persistence of idiosyncratic price spikes, strengthens the case of ‘higher for longer’, a theme that is playing out globally too.
As India CPI inflation starts tapering-off in 2H FY24, we expect the repo rate to remain unchanged at 6.50%. Any price shocks could alter expectations.
RBI Policy Meeting Live: Sensex, Nifty extend losses on hawkish RBI; here’s what experts say
Domestic equity market benchmarks, the Sensex and the Nifty extended their losses while rate-sensitive sectors such as banking, automotive, and realty initially turned green briefly, but later fell after the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained a status quo on policy rates and stance on Thursday, August 10, as expected.
Reference Link:- https://www.livemint.com/economy/rbi-policy-live-rbi-monetary-policy-by-governor-shaktikanta-das-repo-rate-decision-by-rbi-mpc-11691576598594.html