RBI Monetary Policy Live | Status Quo On Repo Rate A Pause, Not Pivot: Das
The RBI has left the repo rate unchanged at 6.50%, amidst sticky inflation at home and a banking crisis elsewhere.
India's Monetary Policy Committee has decided to keep the benchmark repo rate unchanged but is ready to act as and when needed, amid sticky inflation at home and banking crisis elsewhere.
Key takeaways from RBI Governor Shaktikanta Das' speech:
Decision to keep repo rate unchanged at 6.5% was unanimous.
The standing deposit facility rate, pegged 25 bps below the repo rate, is at 6.25%.
The marginal standing facility rate, which is 25 bps above the repo rate, is at 6.75%.
The committee had first raised rates by 40 basis points at an unscheduled meeting in May last year, followed by 50 basis points each in June, August and September. It raised rates by a further 35 basis points in December last year, followed by a hike of 25 basis points in February this year.
The MPC decided with 5:1 majority to remain focused on withdrawal of accommodation, Das said.
Track live updates and key highlights of India's first monetary policy of fiscal 2024 , here:
RBI Proposes Linking Bank Credit Lines With UPI
The Reserve Bank of India has proposed to link pre-sanctioned bank credit lines with the Unified Payments Interface to further expand the scope of real-time payments network.
"It is now proposed to expand the scope of UPI by permitting operation of pre-sanctioned credit lines at banks through the UPI. This initiative will further encourage innovation," RBI Governor Shaktikanta Das said after the monetary policy committee meeting on Thursday. The move follows the June 2022 decision to link Rupay credit cards with UPI. (read more)
RBI Seeks To Deepen Foreign Exchange Market With Onshore NDFs
India announced steps to deepen its foreign exchange market by allowing local residents trade currency derivatives contracts popular in the offshore market, according to the central bank.
Local lenders with a so-called IFSC Banking Unit — basically having a unit in the International Financial Services Centre currently in GIFT City in the western state of Gujarat — will be permitted to offer non-deliverable forwards to residents onshore, RBI Governor Shaktikanta Das said in his policy speech Thursday. That will enable banks to offer enhanced currency hedging opportunities to their customers.
Domestic Lenders Healthy Despite Global Banking Volatility, Das Says
There have been some improvements in high-frequency indicators around the world, according to Reserve Bank of India Governor Shaktikanta Das. However, the global economic outlook is now marred by concerns about financial stability, he said.
These uncertainties, combined with high inflation prints, have led to financial market volatility, reflected in sizeable two-way movements in bond yields, a fall in equity markets, and the U.S. dollar losing steam.
"Amidst this volatility, the banking and non-banking financial service sectors in India remain healthy, and financial markets have evolved in an orderly manner," the RBI Governor said in his speech on Thursday after announcing the first monetary policy decision of fiscal 2024. (read more)
RBI Monetary Policy: On Rupee Internationalisation
"We are seeing that interest," RBI Deputy Governor T. Rabi Sankar says, when asked about the interest in rupee internationalistion.
"Volumes are not picking up as much, but those are teething issues that needed to be worked out," he says.
RBI is seeing increased interest from a number of countries, Sankar says.
"Initial processes are on and are encouraging. This is a long-term objective and we have to build towards that."
RBI Monetary Policy: On Growth Projections
The Reserve Bank of India has always been prudent and conservative on its growth projections, Governor Shaktikanta Das says when asked whether the central bank is over-optimistic in its GDP estimates for FY24.
The central bank has raised its GDP growth expectations for FY24 to 6.5% from 6.4% earlier.
