RBI MPC Meeting 2024 Highlights RBI keeps repo rate unchanged at 6.5% amid high inflation; cuts FY25 GDP projection

Bankers hailed the RBI's decision to cut a 0.50 percent cut in the cash reserve ratio (CRR) as one that will help bring down the cost of funds for the lenders.

With the cut, the CRR was reduced to 4 pc from 4.5 pc, a move that will help unlock Rs 1.16 lakh crore bank funds.

"Banks will have additional resources for lending to the productive sectors. This will also result in lower cost of funds for the banks," industry grouping IBA's Chairman M V Rao said.

Rao, who also serves as the chief executive and managing director of state-run Central Bank of India, said the CRR cut will help infuse Rs 1.16 lakh crore into the system and the cut will help in keeping interest rates benign.

The country's largest lender SBI's chairman C S Setty termed the policy as "pragmatic and candid".

"The cut in CRR by 50 bps, raising the FCNR (B) deposit rates, development of the Secured Overnight Rupee Rate (SORR) benchmark, and revision in the limit of collateralised agriculture loans are all positive for banks," he said.

Setty added that the decision to form a committee to investigate the issue of ethical AI in financial services and the use of technology to detect mule accounts is a timely one.

Among the private sector lenders, Tamilnad Mercantile Bank's Managing Director and Chief Executive Salee S Nair called the status quo in the repo rate as a "positive step", and welcomed the action on agriculture sector to increase the limits on collateral-free loans.

"The MPC's decision to hold repo rate in the face of slower growth, shows its focus on reining in inflation," Standard Chartered Bank's Zarin Daruwala said, welcoming the regulatory and development moves.

Among the non-banks, Tata Capital's Rajiv Sabharwal said the decision to hold the repo but cut the CRR reflects a balanced approach that encourages growth while ensuring price stability.

(PTI)

The government has appointed Vaibhav Chaturvedi as the ex-officio member of the Insolvency and Bankruptcy Board of India (IBBI), according to an official notification.

Currently, Chaturvedi is the Chief General Manager of the Reserve Bank of India (RBI).

IBBI, established in 2016, under the Insolvency and Bankruptcy Code, 2016, is responsible for the implementation of the code. The board plays a critical role in promoting transparency and accountability in the insolvency resolution process.

"...the central government hereby appoints Vaibhav Chaturvedi, Chief General Manager, Reserve Bank of India as the ex-officio member in the Insolvency and Bankruptcy Board of India to represent the Reserve Bank of India in said Board," corporate affairs ministry said on December 3.

As the Reserve Bank of India's (RBI's) representative, Chaturvedi will contribute to the IBBI's efforts in ensuring a smooth and transparent resolution process under the Code, which aims to resolve stressed assets and enhance credit discipline in the financial sector.

The appointment underscores the RBI's continued involvement in the insolvency ecosystem to strengthen its synergy with other regulatory and enforcement agencies.

(PTI)

RBI Governor Shaktikanta Das remained tight-lipped on whether his term would be extended during Friday's Monetary Policy Committee (MPC) press conference.

When asked about the possibility of an extension, Das replied, "I am not giving you any headlines." Speculation has been mounting that the government may extend his tenure for a third term, which would make him the longest-serving RBI Governor since the 1960s. His current term is set to end on December 10, 2023.

Snapping the five-day winning run, benchmark Sensex dropped by 56 points in a highly volatile trade on Friday after the Reserve Bank cut the growth projection for 2024-25 and kept the policy rates unchanged.

After oscillating between highs and lows during the day, the 30-share BSE benchmark Sensex declined 56.74 points or 0.07 per cent to settle at 81,709.12. Intra-day, it swung 419.72 points, hitting a high of 81,925.91 and a low of 81,506.19.

In the past five trading days, the BSE benchmark jumped 2,722.12 points or 3.44 per cent.

The NSE Nifty dipped 30.60 points or 0.12 per cent to settle at 24,677.80.

The Reserve Bank of India on Friday kept its key interest rate unchanged citing inflation risks, but cut the Cash Reserve Ratio that banks are required to park with the central bank, boosting money with lenders to support a slowing economy.

(PTI)

Reserve Bank Governor Shaktikanta Das on Friday said India does not have any plans to 'de-dollarise' its trade and is only looking at derisking it by other means. He was responding to a question on US President-elect Donald Trump's threat that BRICS countries will face 100 per cent tariffs if they choose to move away from the US dollar.

"With regard to the de-dollarisation etc...so far as India is concerned, there is no step which we have taken which specifically wants to de-dollarise," Das said.

On the BRICS currency, he mentioned that it is an idea floated by one of the members of the grouping, which includes Brazil, Russia, India, China and South Africa, but added that there has been no progress on it beyond some discussions. He said BRICS countries are scattered across the globe and pointed out that contiguity has helped in the success of a single currency for the European Union.

Das said India's attempts are limited at permitting vostro accounts and entering into agreements with two countries for settling trade transactions in local currency. "That is basically to derisk our trade. Dependence on one currency can be problematic at times because of appreciation or depreciation. De-dollarisation is certainly not our objective, it is not on the table at all," he said. (PTI)

The 4-2 decision to keep the Repo rate unchanged indicates that there are differences of opinion in the policy panel about the way forward in the wake of the slowdown in the economy.

RBI Governor Shaktikanta Das flagged the persistent food inflation in his explanation for the majority decision.

“Food inflation pressure is likely to linger in Q3 of FY25 and start easing in Q4 of FY25. High inflation reduces disposable income in the hands of consumers. MPC believes that only with durable price stability, we secure strong foundation for high growth,” he said.

Over the last two months, two Union Ministers have called for a cut in the Repo rate. Last month, Finance Minister Nirmala Sitharaman batted for “affordable bank interest rates” to support industries to ramp up and build capacities. And the Union Minister for Commerce and Industry, Piyush Goyal, urged the RBI to cut interest rates to boost economic growth and look through food prices while deciding on monetary policy. Read More

The Reserve Bank of India (RBI) on Friday (December 6) slashed the cash reserve ratio (CRR) by 50 basis points (bps) to 4% from 4.5% in a bid to boost liquidity in the financial system.

CRR is the percentage of a bank’s total deposits that it is required to maintain in liquid cash with the RBI as a reserve.

The Monetary Policy Committee (MPC) of the RBI, which met in Mumbai on Friday, however, kept the Repo rate – the key policy rate – unchanged at 6.5% in a majority 4-2 decision. This is the eleventh consecutive monetary policy, over 22 months, which has left the Repo rate unchanged.

Significantly, the policy panel cut the GDP growth estimate to 6.6% in FY2025 from 7.2% projected earlier and raised the retail inflation forecast to 4.8% for the current fiscal from 4.5% projected earlier.

The Indian rupee strengthened on Friday on the back of a softer dollar and after the Indian central bank kept policy rates unchanged but cut banks' cash reserve ratio, effectively easing monetary conditions amid slowing economic growth.

The rupee closed at 84.6875 against the US dollar, up from its close at 84.7325 in the previous session. The currency logged a fifth consecutive weekly fall, declining 0.2%.

The Reserve Bank of India also raised the interest rate ceiling that banks can offer for foreign currency non-resident (FCNR-B) deposits to boost forex inflows at a time when the rupee has been under consistent pressure.

The rupee had declined to its all-time low of 84.7575 earlier in the week, hurt by weakness in the Chinese yuan and strong dollar bids in the non-deliverable forwards market, prompting intervention by the RBI.

While the rupee rose to a peak of 84.58 after the RBI's policy announcement, it consequently pared its gains amid dollar demand from importers, including local oil companies, a trader at a state-run bank said.

(With inputs from Reuters)

The Governor also said that the Reserve Bank has been deploying traditional as well as new-age communication techniques as a key part of its toolkit to ensure transparency and greater impact of its decisions, explain the rationale behind its decisions, and disseminate various awareness messages to a wider audience.

The Reserve Bank has been expanding the scope of its public awareness activities including through social media over the last few years.

In continuation of this endeavour, the Reserve Bank proposes to launch podcasts for wider dissemination of information that is of interest to the general public, Das said.

(With PTI inputs)

Benchmark equity indices Sensex and Nifty dipped in mid-day trade after the Reserve Bank of India’s monetary policy announcement.

The 30-share BSE benchmark Sensex declined 259.67 points to 81,506.19 soon after the announcement. The NSE Nifty also went lower by 87.9 points to 24,620.50.

The Reserve Bank of India on Friday decided to keep the policy rate unchanged for the 11th time in a row but sharply lowered the GDP growth forecast to 6.6 per cent for the current fiscal, as against an earlier projection of 7.2 per cent.