The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the 4 th bi-monthly monetary policy for FY24. While announcing the decision Monetary Policy Committee (MPC) maintained status quo on rates and stance. MPC unanimously decided to keep the repo rate unchanged at 6.50%. The MPC last raised this rate by 25 bps to 6.50% at its meeting in February 2023.
Key Highlights:
• RBI remains focused on withdrawal of accommodation, support growth, tame inflation.
• Standing deposit facility (SDF) rate remains at 6.25% & Marginal standing facility (MSF) rate maintained at 6.75%.
• CRR at 4.5%
• Real GDP growth forecast retained at 6.5% for FY24.
• Inflation forecast too retained at 5.4% for FY24. Cooling vegetable prices, cut in LPG rates to soften inflation.
• India is poised to become new growth engine of world.
• Limit of gold loan under Bullet Repayment Scheme for UCBs doubled to ₹4 lakh.
• Payments Infrastructure Development Fund scheme extended by 2 years to December 2025. It will now include beneficiaries of the PM Vishwakarma scheme.
• The RBI will introduce the facility for creation of card-on-file tokenization at the issuer bank level to enhance convenience for cardholders in getting tokens created and linking them to their existing accounts with e-commerce applications.
• RBI has allowed NBFCs classified as middle and base layer entities, to utilize credit risk mitigation tools to offset their exposure with eligible credit risk transfer instruments.
• RBI has plans to undertake open market operation (OMO) with regard to G-secs to manage liquidity. This will be via auction mode.
• Next Monetary Policy Committee (MPC) meeting scheduled for Dec 6-8, 2023.
• RBI to gradually remove Incremental Cash Reserve Ratio (ICRR), freeing up capital for banks.
Market Reaction:
The equity markets reacted positively to the RBI policy and now the market’s attention is anticipated to shift towards global market dynamics. The Sensex was trading 249.28 points, or 0.38%, higher at 65,880.85, and the Nifty 50 was up 76.95 points, or 0.39%, at 19,622.70.