In a surprising move, the RBI on Thursday decided to keep the repo rate unchanged at 6.50 per cent after hiking by 250 basis points continuously since May 2022. It also revised downwards India’s FY24 inflation projection to 5.2 per cent from 5.3 per cent estimated earlier, and raised FY24 GDP growth forecast to 6.5 per cent from 6.4 per cent earlier. Here’re all the announcements made by RBI Governor Shaktikanta Das on Thursday:
Repo Rate Unchanged
The key announcement made by the RBI governor was keeping the key repo rate unchanged at 6.5 per cent, contrary to a 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.
The RBI also kept the SDF unchanged at 6.25 per cent, and MSF and Bank Rates maintained 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 Lowered
The RBI on Thursday revised downwards the CPI inflation projection to 5.2 per cent for the current financial year, compared with the earlier forecast 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 projected at 5.1 per cent; Q2 at 5.4 per cent; Q3 at 5.4 per cent; and Q4 at 5.2 per cent.
While presenting the first bi-monthly monetary policy statement of FY24, RBI Governor Shaktikanta Das said, “Looking ahead, the expectation of a record rabi harvest bodes well for the easing of food price pressures. There are already evidence of a correction in wheat prices in March on supply-side interventions by the government. The impact of the recent unseasonal rains in some parts of the country, however, needs to be watched.”
FY24 GDP Growth Raised
The Reserve Bank of India raised India’s GDP forecast for FY24 to 6.5 per cent, from 6.4 per cent forecast earlier. The RBI governor said India’s economy is expected to have grown 7 per cent in FY23.
Stating that India’s economic activity remains resilient, he said the country’s real GDP growth for FY24 is projected at 6.5 per cent, with Q1 at 7.8 per cent, Q2 at 6.2 per cent, Q3 at 6.1 per cent, and Q4 at 5.9 per cent.
The RBI’s projection of 6.5 per cent for FY24 is close to the Economic Survey’s forecast. The Survey had projected a baseline growth rate of 6.5 per cent with a range of 6-6.8 per cent. The 7 per cent projection of the RBI for FY23 is the same as the official second advanced estimate released in February.
UPI: Operation of Pre-Sanctioned Credit Lines at Banks Allowed
Expanding the score of UPI, the RBI has now allowed operation of pre-sanctioned credit lines at banks through the UPI. This initiative will further encourage innovation.
Recently, RuPay credit cards were permitted to be linked to UPI. This was in addition to the existing facility of linkage of UPI with deposit accounts.
PRAVAAH Portal For Regulatory Processes
To simplify and streamline processes to receive licence from the RBI or regulatory approval, the RBI has decided to have a secured web-based centralised portal named as ‘PRAVAAH’ (Platform for Regulatory Application, Validation And AutHorisation). This is in line with the Union Budget 2023-24 announcement.
Currently, the processes for entities to make applications seeking licence/ authorisation or regulatory approvals from the Reserve Bank under various statutes/ regulations take place in both online and off-line modes.
“This measure will bring greater efficiencies into regulatory processes and facilitate ease of doing business for the regulated entities of the Reserve Bank,” Das said.
Developing an Onshore Non-deliverable Derivative Market
The RBI has now allowed banks with IFSC Banking Units (IBUs) to offer non-deliverable foreign exchange derivative contracts (NDDCs) involving the Indian rupee to resident users in the onshore market. Currently, it is available for non-residents.
“This measure will further deepen the forex market in India and provide enhanced flexibility to residents in meeting their hedging requirements,” the RBI governor said.
Centralised Portal for Unclaimed Deposits
To help depositors or beneficiaries in getting back unclaimed deposits, the RBI has decided to develop a web portal to enable search across multiple banks for possible unclaimed deposits.
Currently, the depositors or beneficiaries of unclaimed bank deposits of 10 years or more have to go through the websites of multiple banks to locate such deposits.
Grievance Redress Mechanism Related to Credit Information Companies
To enhance consumer protection, the RBI has proposed to put in place a number of measures: (i) a compensation mechanism for delayed updation/ rectification of credit information reports; (ii) a provision for SMS/email alerts to customers whenever their credit information reports are accessed; (iii) a timeframe for inclusion of data received by CICs from Credit Institutions; and (iv) disclosures on customer complaints received by CICs.
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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