The Reserve Bank of India (RBI) has kept benchmark interest rates unchanged for the 5th consecutive time in its bi-monthly Monetary Policy Committee (MPC) meeting. The key repo rate has remained stable at 6.5% for five consecutive reviews.
MPC meeting
Policy Repo Rate: 6.5%
- Repo rate is the rate at which the central bank of a country (RBI for India) lends money to commercial banks in case of shortage of funds. Here the central bank buys securities.
Standing Deposit Facility (SDF): 6.25%
- SDF is a liquidity window through which RBI will give banks the option to retain excess liquidity.
- It differs from the reverse repo facility as it does not require banks to provide collateral while depositing funds.
Marginal Standing Facility Rate: 6.75%
- MSF is a window for scheduled banks to borrow overnight from the RBI in an emergency situation when interbank liquidity is completely exhausted.
Cash Reserve Ratio (CRR): 4.50%
- Under CRR, commercial banks are required to maintain a certain minimum amount as deposits (NDTL) with the central bank.
- Statutory Liquidity Ratio (SLR): 18.00%
- SLR is the minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities.
Estimate
Growth forecast
- The GDP growth forecast for 2023-24 was raised to 7% from 6.5% earlier, with a strong growth of 7.6% in the second quarter of FY 2023-24.
Inflation forecast
- The Consumer Price Index (CPI) based inflation forecast for the financial year 2023-24 has been maintained at 5.4%.
Other initiatives of RBI
UPI limit increase for health and education
- According to industry experts, RBI has increased the UPI limit for health and education transactions from Rs 1 lakh to Rs 5 lakh per transaction, to enable adequate operational benefits for both health care institutions and patients. .
Recurring e-payment mandate
- RBI has increased the recurring e-payment mandate limit for credit cards, insurance premium payments and mutual fund investments from Rs 15,000 to Rs 1 lakh, allowing more significant periodic transactions.
Regulatory framework for web-aggregation
- RBI plans to set up a regulatory framework for web-aggregation of loan products to improve customer-centricity and transparency in digital lending.
Partnership with Fintech
- RBI has tried to get a better grip on the growing incidence of banks and non-banking finance companies (NBFCs) partnering with FinTech by proposing the creation of a FinTech repository by April 2024.
- Fintechs will be encouraged to voluntarily provide relevant information to this repository.