MPC votes to keep Repo Rate unchanged for the 9th consecutive time
Economy
5 min read
Announcing the third bi-monthly monetary policy of the financial year 2024-25 on 8 August 2024 in Mumbai, Reserve Bank of India (RBI) Governor Shaktikanta Das said that the Monetary Policy Committee (MPC) has voted by a 4:2 majority to keep the policy repo rate unchanged at 6.5% for the ninth consecutive times.
The RBI’s Monetary Policy Committee met on August 6, 7, and 8, 2024. The next meeting will be held on October 7 to 9, 2024.
According to the RBI Act 1934, the Monetary Policy Committee has to meet at least four times in a financial year.
Policy rates and Ratios after the 3rd bi-monthly monetary policy
There have been no changes in the Policy rates and Ratios. They are as follows:
|
Policy Repo Rate |
6.5% |
|
Fixed Reverse Repo Rate |
3.35% |
|
Bank Rate |
6.5% |
|
Standing Deposit Facility(SDF) |
6.25% |
|
Marginal Standing Facility(MSF) |
6.75% |
|
Cash Reserve Ratio(CRR) |
4.50% |
|
Statutory Liquidity Ratio(SLR) |
18% |
GDP growth forecast for 2024-25
RBI has not changed its forecast for the Indian economic growth rate for the financial year 2024-25 and expects the Indian GDP to grow by 7.2%.
The growth rate of the Indian economy in 2023-24 was 8.2 per cent.
According to the RBI, the expected quarter-wise growth rate of Indian GDP in 2024-25 are as follows;
|
Quarter of Financial Year 2024-25 |
Growth Rate |
|
Q1(April - June 2024) |
7.1 % |
|
Q2(July to November 2024) |
7.2% |
|
Q3 (October -December 2024) |
7.3% |
|
Q4 (January 2025- March 2025) |
7.2 % |
Policy Initiatives Announced by the RBI Governor
In order to strengthen and develop the banking sector in India, the Governor announced a number of initiatives.
- RBI will launch a Public Repository of Digital Lending Apps deployed by banks and Non-Banking Financial Companies (NBFCs) regulated by RBI.
- The lenders will provide the credit-related information of their borrowers to the Credit Information Companies every fortnight or at shorter intervals. (At present, it is given monthly or at shorter intervals.)
- The maximum amount limit for paying taxes through the Unified Payment Interface (UPI) has been increased from Rs 1 lakh to Rs 5 lakh per transaction. For normal transactions, the maximum limit for UPI is Rs 1 lakh per day.
- The Cheque Truncation System (CTS) will adopt continuous clearing with on-realisation-settlement, which will enable cheque clearing in a few hours. At present, CTS operates in a batch system, which takes around two working days to clear cheques.
Monetary Policy Committee
- The government of India set up the Monetary Policy Committee on 29 September 2016 under the provisions of the Reserve Bank of India Act 1934.
- The Monetary Policy Committee (MPC) consists of six members, including the RBI Governor, who is also the head of the MPC.
- The MPC determines the policy interest rate of the RBI in order to achieve the inflation target.
- The members of the present Monetary Policy Committee are Shaktikanta Das, RBI’s deputy governor Michael Debabrata Patra and economists- Dr Mridul K. Saggar, Dr Ashima Goyal, Dr Shashanka Bhide and Prof. Jayanth R. Verma,
- The MPC has to meet at least four times in a financial year.
- All the decisions in the Monetary Policy Committee are taken by a simple majority.
