In a surprise move, the RBI on Thursday decided to keep the repo rate unchanged at 6.50 per cent after a consecutive 250 basis point hike through May 2022. It also reduced India’s FY24 inflation forecast to 5.2 per cent from 5.3 per cent earlier. And raised the FY24 GDP growth forecast to 6.5 per cent from 6.4 per cent. Here are all the announcements made by RBI Governor Shaktikanta Das on Thursday:
repo rate unchanged
The major announcement made by the RBI governor was to keep the key repo rate unchanged at 6.5 per cent, contrary to the 25-basis point hike expected by the market. The reverse repo rate and CRR also remained unchanged at 3.35 per cent and 4.5 per cent, respectively.
RBI also kept SDF unchanged at 6.25 per cent and MSF and Bank Rates at 6.75 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.
FY24 inflation eases
The RBI on Thursday revised the CPI inflation forecast for the current fiscal to 5.2 per cent from the earlier estimate of 5.3 per cent. Assuming an annual average crude oil price (Indian basket) of $85 per barrel and a normal monsoon, Q1 CPI inflation is estimated at 5.1 per cent; Q2 at 5.4 percent; Q3 at 5.4 per cent; and Q4 at 5.2 percent.
Presenting the first bi-monthly monetary policy statement of FY24, RBI Governor Shaktikanta Das said, “Looking ahead, expectations of a record rabi crop augur well for easing food price pressures. There is already evidence of a recovery in wheat prices in March on supply-side intervention by the government. However, there is a need to watch the impact of recent unseasonal rains in some parts of the country.”
FY24 GDP growth picks up
The Reserve Bank of India raised India’s GDP forecast for FY24 to 6.5 per cent from 6.4 per cent earlier. The RBI governor said that India’s economy is expected to grow at 7 per cent in FY23.
Asserting that India’s economic activity remains resilient, he said the country’s real GDP growth is estimated at 6.5 per cent for FY24, followed by 7.8 per cent in Q1, 6.2 per cent in Q2, 6.1 per cent in Q3 and 5.9 per cent in Q4.
The RBI’s estimate of 6.5 per cent for FY24 is close to the Economic Survey’s forecast. The survey projected a baseline growth rate of 6.5 percent, with a range of 6-6.8 percent. The RBI’s 7 per cent projection for FY23 is similar to the official second advanced estimate released in February.
UPI: Permission to operate pre-approved credit lines in banks
Expanding the score of UPI, RBI has now allowed operation of pre-approved credit lines in banks through UPI. This initiative will further encourage innovation.
Recently RuPay credit cards were allowed to be linked to UPI. This was in addition to the existing facility of linking UPI with deposit accounts.
Flow Portal for Regulatory Processes
In order to simplify and streamline the procedures for obtaining license or regulatory approval from RBI, RBI has set up a secure web-based centralized portal called ‘PRAVAAH’ (Platform for Regulatory Application, Verification and Authorization). This is in line with the announcement in the Union Budget 2023-24.
Currently, the process for entities to apply for license/authorization or regulatory approval from the Reserve Bank under various laws/regulations is both online and offline.
“This measure will bring in greater efficiency in regulatory processes and ease of doing business for entities regulated by the Reserve Bank,” Das said.
Development of an onshore non-deliverable derivatives market
The Reserve Bank of India has now permitted banks with IFSC Banking Units (IBUs) to offer Indian Rupee linked non-deliverable foreign currency derivative contracts (NDDCs) to resident users in the onshore market. Currently, it is available for non-residents.
“This measure will further deepen the foreign exchange market in India and provide more flexibility to residents in meeting their hedging requirements,” the RBI governor said.
Centralized Portal for Unclaimed Deposits
In order to help the depositors or beneficiaries to get back unclaimed deposits, RBI has decided to develop a web portal to search across multiple banks for possible unclaimed deposits.
At present, depositors or beneficiaries of unclaimed bank deposits of 10 years or more have to go through the websites of several banks to locate such deposits.
Grievance Redressal Mechanism relating to Credit Information Companies
In order to enhance consumer protection, RBI has proposed several measures: (i) a compensation mechanism for delay in updation/correction of credit information reports; (ii) provision of SMS/email alerts to customers on accessing their Credit Information Report; (iii) the time limit for incorporation of data received by the CIC from the credit institutions; and (iv) disclosure on customer complaints received by the CIC.
Recently, Credit Information Companies (CICs) like CIBIL and Experian were brought under the purview of the Reserve Bank Integrated Ombudsman Scheme (RB-IOS).
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