In its bi-monthly monetary policy statement, the Reserve Bank of India (RBI) decided to keep the key repo rate unchanged at 6.5% for the ninth consecutive time. The decision, made by a majority of 4 out of 6 members of the Monetary Policy Committee (MPC), reflects the stance of ‘withdrawal of accommodation’. This decision aims to balance the need for supporting economic growth while managing inflation.
RBI Governor Shaktikanta Das highlighted that India’s economic growth remains robust and inflation is on a declining trend. He noted that while the global near-term outlook appears positive, the medium-term outlook presents challenges.
The RBI also kept other key rates unchanged. The Standing Deposit Facility (SDF) remains at 6.25%, the Marginal Standing Facility (MSF) and the Bank Rates are maintained at 6.75%, and the reverse repo rate is at 3.35%. The Cash Reserve Ratio (CRR) stands at 4.5%, and the Statutory Liquidity Ratio (SLR) is at 18%.
The central bank has maintained its GDP growth projection for FY25 at 7.2%, with detailed quarterly projections indicating steady growth throughout the year. Similarly, the CPI inflation projection for FY25 remains at 4.5%, reflecting a cautious approach towards potential inflationary pressures, especially from food prices.
Governor Das emphasized that while temporary spikes in food inflation might be looked through, persistent high food inflation requires vigilance to prevent broader economic impacts. Assuming a normal monsoon, the RBI expects inflation to be manageable within its projected range.
In addition to the rate decisions, the RBI announced several measures to enhance financial and payment systems:
UPI Transaction Limit Increase: The limit for tax payments through UPI will be increased from Rs 1 lakh to Rs 5 lakh per transaction, easing tax payments for consumers.
Digital Lending Apps Repository: A public repository of digital lending apps deployed by regulated entities will be created to help consumers identify authorized lending apps, addressing issues from unauthorized apps.
Credit Information Reporting: The frequency of reporting credit information to credit information companies will be increased to a fortnightly basis or shorter intervals, benefiting both lenders and borrowers by ensuring faster updates of credit information.
Delegated Payments in UPI: A new facility will allow primary users to delegate UPI transactions to secondary users without needing a separate bank account, further promoting digital payment usage.
Continuous Clearing in CTS: The clearing cycle for cheques will be reduced by introducing continuous clearing with ‘on-realisation-settlement’, speeding up cheque payments and benefiting both payers and payees.
