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RBI Governor Shaktikanta Das : RBI Governor Shaktikanta Das Announces Interest Rate Decision and Other Measures

In a recent announcement, RBI Governor Shaktikanta Das provided insights into the interest rate decision made by the Monetary Policy Committee (MPC), shedding light on various other crucial decisions undertaken by the central bank in the face of global economic uncertainties.

RBI Policy

The Reserve Bank of India (RBI) plays a pivotal role in shaping the nation’s monetary policies and financial landscape. In this article, we delve into the recent announcements made by RBI Governor Shaktikanta Das, highlighting the key takeaways and their potential impact on India’s economy.

Interest Rate Decision

As experts had predicted, the RBI’s MPC chose to maintain the status quo by keeping the key policy rate unchanged. The last two bi-monthly policy reviews held in April and June had already set the stage for this decision. The key repo rate remained steady at 6.50 per cent, aiming to provide stability amidst global economic uncertainties.

RBI Governor Shaktikanta Das Unveiled Policies

RBI Governor Shaktikanta Das unveiled plans to enhance the integrity of financial benchmarks. The RBI announced a comprehensive, risk-based framework for the administration of financial benchmarks. The move is intended to improve the regulatory framework for financial benchmark administrators, with the ultimate goal of ensuring transparency and reliability.

Revised Inflation Projections

The RBI revised the country’s retail inflation projections for the fiscal year 2023-24. The initial projection of 5.1 per cent was adjusted to 5.4 per cent, reflecting the changing economic dynamics. These revisions are in response to the surge in retail inflation observed in recent months, primarily driven by factors such as vegetable price fluctuations.

Forward-Looking Inflation Outlook

RBI Governor Shaktikanta Das outlined the expected trajectory of retail inflation assuming a normal monsoon. The revised projections forecast retail inflation at 5.4 per cent, with the second quarter (Q2) estimated to be 6.2 per cent, followed by 5.7 per cent in Q3, and 5.2 per cent in Q4. The forecast for Q1 2024-25 stands at 5.2 per cent. Governor Das maintained that the risks surrounding these projections are evenly balanced.

Digital Payments and Enhanced Limits

The RBI’s commitment to fostering digital payments was highlighted through its proposal to increase the per transaction payment limit for UPI Lite in offline mode. The move to raise the limit to ₹500 aims to promote digital payment adoption and convenience, providing a seamless experience for small value transactions.

Transition to Fixed Interest Rate

In a welcome move for borrowers, the RBI Governor Shaktikanta Das announced a framework that allows borrowers to switch from a floating interest rate to a fixed interest rate. This initiative aims to alleviate the burden on borrowers, especially those with home, auto, and other loans who have been impacted by high interest rates.

Economic Outlook and Stability

RBI Governor Shaktikanta Das reiterated the central bank’s commitment to maintaining stability and aligning inflation with the 4 per cent target. Despite the challenges posed by volatile international food and energy prices, geopolitical tensions, and weather-related uncertainties, India’s strong macroeconomic fundamentals have supported robust growth.

Public Tech Platform for Credit Delivery

The RBI’s efforts to innovate and enhance credit delivery were highlighted through the development of a Public Tech Platform. This platform aims to facilitate frictionless credit delivery and will be rolled out as a pilot project. With an open architecture and API, this platform aims to connect various financial sector players seamlessly.

Conclusion

The recent announcements made by RBI Governor Shaktikanta Das underscore the central bank’s commitment to fostering economic stability and growth in the face of global economic uncertainties. From interest rate decisions to enhanced financial benchmarks and digital payment initiatives, these measures collectively contribute to shaping India’s economic landscape.

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FAQs

What is the key takeaway from RBI’s recent announcement?

The key takeaway is the maintenance of the key policy rate at 6.50 per cent, reflecting the central bank’s focus on stability.

How does RBI plan to enhance financial benchmark administration?

RBI intends to implement a comprehensive, risk-based framework to improve the administration of financial benchmarks.

What are the revised inflation projections for 2023-24?

The revised projections estimate retail inflation at 5.4 per cent for the fiscal year 2023-24.

How is RBI promoting digital payments?

RBI is proposing an increase in the per transaction payment limit for UPI Lite in offline mode to ₹500.

What initiative has RBI taken for borrowers with loans?

RBI has introduced a framework allowing borrowers to switch from floating to fixed interest rates, providing relief to borrowers impacted by high rates.

Ankit Singh

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