Pururaj Sharma’s Post

https://lnkd.in/gWpjh7am The repo policy rate remained unchanged at 6.5%. This will help to manage liquidity and credit creation in the system. With a projected 7.5% GDP Growth rate this will enhance and boost the credit offtake and consumption. With rising inflation, constant growth policy with an unchanged Repo rate, RBI's monetary policy signals the will to improve consumption in the economy. Though OMO has led the growth of Repo there was no mention of OMO in the monetary policy announcement. Though CPI has remained stagnant that implies no change in unemployment levels

Analyzing the implications of the RBI’s latest policy, Anitha Rangan, Economist at Equirus, said, “As widely expected, RBI has held its policy rate at 6.5 per cent, while announcing a CRR cut of 50 bps in two tranches of 25 bps each over the next two fortnights. By doing this, the RBI has provided adequate liquidity and eased the short term borrowing, while keeping longer term well anchored. Alongside the growth outlook of 7.2 per cent for FY25 has been taken down to 6.6 per cent, with the recent slowdown in growth. Inflation outlook has however been revised upwards to 4.8 per cent for FY25 from 4.5 per cent with 4 per cent reaching in Q2 of FY26.” Road the full article: https://lnkd.in/dqZYC8eu

Key takeaways from the MPC meeting : 1) Repo Rate: Maintained at 6.5% with a 5:1 majority, aiming to align inflation with targets while supporting growth. 2) SDF & MSF Rates: SDF rate at 6.25%, MSF and Bank rates at 6.75%. 3) GDP Forecast: Projected steady growth of 7% in Q2, 7.4% in Q3 and Q4, with a slight dip to 7.3% in Q1 of FY26. FY25 forecast remains at 7.2%. 4) Inflation: Projected at 4.5% for FY25, with quarterly figures of 4.1% (Q2), 4.8% (Q3), and 4.3% (Q1 FY26). 5) Indian Rupee: Continues to be the least volatile among global currencies. 6) Das’ Message to NBFCs: Urged banks and NBFCs to carefully assess their exposures. 7) FPI Flows: Shifted from net outflows to net inflows of $19.2 billion between June and October. 8) Current Account Deficit: Widened to 1.1% of GDP in Q1 FY25. 9) Responsible Lending: Banks and NBFCs cannot levy pre-payment penalties on floating rate loans to individuals for non-business purposes. 10) Urban Cooperative Banks (UCBs): Discussion paper on capital raising avenues to be issued for stakeholder feedback. 11) Climate Risk Assessment: RBI to launch the Reserve Bank Climate Risk Information System (RBris). 12) UPI Enhancements: UPI One Three Pay transaction limit raised to Rs 10,000; UPI Light wallet limit increased to Rs 5,000, with per-transaction limits up to Rs 1,000. 13) RTGS & NEFT: Beneficiary account name lookup facility to be introduced to reduce wrong credits and fraud. These highlights focus on growth, inflation control, financial stability, and enhancing digital payment systems.

RBI MPC MEETING POST(2/2) 1. Policy Repo Rate Unchanged: The Reserve Bank of India (RBI) decided to keep the policy repo rate steady at 6.50%. 2. Focus on Inflation Management: The RBI's primary concern is to ensure inflation remains under control, targeting a rate of 4% in the medium term. 3. Economic Growth Outlook: With India's GDP growth projected at a robust 7% for FY2025, there's optimism for sustaining growth momentum. 4. Expected Rate Cut Cycle Analysts anticipate a shallow rate cut cycle starting from the third quarter of FY2025, gradually moving towards a neutral stance by the end of the second quarter. 5. Global Economic Dynamics Considered: The MPC acknowledged the fluidity of global economic narratives, emphasizing the need for flexibility in policy decisions to ensure financial stability. 6. CBDC and Green Bonds Initiatives The RBI announced plans to expand the distribution of Central Bank Digital Currency (CBDC) through non-bank payment system operators and facilitate trading of sovereign green bonds in the International Financial Services Centre (IFSC). 7. Retail Direct Scheme Accessibility : A mobile application will be launched to enhance access to RBI's Retail Direct Scheme for retail investors interested in government securities (G-secs). 8.Regulatory Compliance Emphasized: Financial entities, including banks and NBFCs, are reminded to prioritize adherence to regulatory guidelines and governance standards to maintain financial stability. 9. Inflation Forecast: CPI-based retail inflation for FY2025 is forecasted at 4.5%, with slight adjustments in quarterly estimates. 10. Currency and Market Response: The Indian rupee remained stable against the US dollar, and the stock market traded flat following the MPC outcome. MY Personal Response:- The RBI decided to keep interest rates steady to control inflation and support economic growth, which is good for stability. They're planning to introduce digital currency and make it easier to trade green bonds. It's important for banks to follow rules to keep our money safe. Liquidity management is also crucial, with SBI Research suggesting that temporary liquidity injections should replace withdrawals, emphasizing the importance of VRRR over OMO in balancing government cash balances. Overall, the RBI's decisions seem sensible and aimed at helping the economy grow steadily..

RBI Monetary Policy 2024 Highlights: Key Announcements and Market Reactions :👇 Repo Rate Stays at 6.5% The Reserve Bank of India (RBI) has maintained the benchmark repo rate at 6.5%, marking the 11th consecutive meeting with no changes. RBI Governor Shaktikanta Das confirmed that the Monetary Policy Committee (MPC) continues to adopt a ‘Neutral’ stance. CRR Reduced by 50 bps to 4% The Cash Reserve Ratio (CRR) has been lowered by 50 basis points to 4%. This move is expected to infuse additional liquidity into the banking system, encouraging more credit availability. This marks the first CRR cut since March 2020, also reduction will occur in two phases, with a 25 basis point cut in each tranche. Significant Boost for the Banking Sector Introduction of Secured Overnight Rupee Rate (SORR) To improve the credibility of interest rate benchmarks and foster growth in the derivatives market, the RBI will introduce a new benchmark—the Secured Overnight Rupee Rate (SORR). This will be based on secured money market transactions such as overnight repo and TREPS. SFBs Allowed to Offer Credit Lines via UPI Small Finance Banks (SFBs) can now extend pre-approved credit lines through UPI, a move designed to promote financial inclusion and benefit customers who are new to credit. Inflation Forecasts Raised for FY25 The RBI has raised its Consumer Price Index (CPI) inflation projection for FY25 to 4.8% (from 4.5%). Revised forecasts are: Q3 FY25: 5.7% (up from 4.8%) Q4 FY25: 4.5% (up from 4.2%) Q1 FY26: 4.6% (up from 4.3%) Q2 FY26: 4% GDP Growth Forecast Lowered The GDP growth projection for FY25 has been reduced to 6.6% (from 7.2%). Revised growth estimates include: Q3 FY25: 6.8% (down from 7.4%) Q4 FY25: 7.2% (down from 7.4%) Q1 FY26: 6.9% (down from 7.3%) Q2 FY26: 7.3% Market Reaction : Indian equity markets, including Sensex and Nifty 50, responded positively to the CRR cut, reflecting investor optimism.

The monetary policy for FY25 aims for a repo rate of 6.5%, projected GDP growth of 7%, and an inflation rate of 4.5% Read More: https://lnkd.in/dwpzEgkN #MonetaryPolicy #FY25 #RepoRate #RBI #monetarypolicy #financialinclusion #digitalpayments #GDPgrowth #inflationrate #economicoutlook #banking #financialregulations #customerconvenience #trending #LiveScoop

KEY POINTS OF RBI MONETARY POLICY 1] Policy Measures: Repo rate unchanged at 6.5% Policy stance unchanged at ‘Neutral’ SDF rate unchanged at 6.25% MSF rate unchanged at 6.75% Bank Rate unchanged at 6.75% MPC members voted by 4:2 majority to maintain status quo CRR cut by 50 bps to 4% CRR cut to release ₹1.16 lakh crore into banking system in two tranches 2] GDP Growth Estimates: FY25 GDP growth estimates cut to 6.6% from 7.2% earlier. Quarterly GDP growth estimates are - FY25: Cut to 6.6% from 7.2% Q3FY25: Cut to 6.8% from 7.4% Q4FY25: Cut to 7.2% from 7.4% Q1FY26: Cut to 6.9% from 7.3% Q2FY26: At 7.3% 3] CPI Inflation Forecast FY25 CPI inflation target raised to 4.8% from 4.5%. Quarterly inflation forecast are - FY25: Raised to 4.8% from 4.5% Q3FY25: Raised to 5.7% from 4.8% Q4FY25: Raised to 4.5% from 4.2% Q1FY26: Raised to 4.6% from 4.3% Q2FY26: At 4% 4] Additional Measures FX-Retail platform to be linked with the Bharat Connect platform of NPCI Introduction of the Secured Overnight Rupee Rate (SORR) – a benchmark based on the Secured Money Markets Limit for collateral-free agriculture loans to be raised to ₹2 lakh per borrower from ₹1.6 lakh Small Finance Banks permitted to extend pre-sanctioned credit lines through the UP Setting up of a Committee to recommend Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector Introduction of Podcast Facility as an Additional Medium of Communication Launch of MuleHunter.AI, an AI solution to identify Mule Bank Accounts Launch of ‘Connect 2 Regulate’ – An initiative for open regulation #RBIMONETARYPOLICY

RBI Policy Highlights Rate Announcements: • RBI decided to keep repo rate unchanged at 6.50% by a majority of 5 out of 6 members • MPC decided to remain focused on withdrawal of accommodation by a majority of 5 out of 6 members Growth: • RBI projected the GDP growth for FY25 at 7% • Quarterly break-up is projected at 7.1% in Q1, 6.9% in Q2 and 7% in Q3 and Q4 Inflation: • Assuming a normal monsoon, the RBI has projected that CPI inflation for FY25 will be at 4.5%. • On a quarterly basis, CPI inflation is expected to be 4.9% in Q1, 3.8% in Q2, 4.6% in Q3, and 4.5% in Q4 Liquidity: • Liquidity conditions improved during February and March, in the wake of increased government spending • WACR hovered near the repo rate since last policy meeting • RBI will conduct more VRRR auctions in April due to the surplus liquidity in the system • Monetary transmission continues to be work in progress • Rupee was the most stable among major currencies in FY24 Current Account Deficit: • India’s current account deficit narrowed significantly on account of a moderation in merchandise trade deficit, coupled with robust growth in services exports and strong remittances • ECBs and NRI deposits recorded higher net inflows vis-a-vis previous year • Forex reserves reached an all time high of $645.6 billion as of March 29, 2024 • India continues to be the receiver of the largest remittances in the world and the cost of receiving remittances is also coming down Other announcements: • Introduction of a mobile app to access RBI’s retail direct scheme for participation in G-Sec market. • Scheme for trading of sovereign green bonds at IFSC to be announced • Undertaking a comprehensive review of LCR framework for banks; draft circular to be issued shortly • Dealing in rupee interest rate derivative products for all small finance banks • Propose to facilitate deposit of cash in Cash Deposit Machines using UPI • UPI access for pre-paid instruments for third party apps – propose to permit using of TPAPs for making UPI payments from PPI wallets • Distribution of CBDC through non-bank payment system operators

#RBIMPC 2024 | The #RBI's Monetary Policy Committee (#MPC) issued its long-awaited policy statement today, marking the first announcement of the current fiscal year. Let's delve into #inflation, #growth, #UPI-based cash deposits, and key takeaways from the RBI MPC https://lnkd.in/gPsGGNMt

RBI Announced a Cash Reserve Ratio ( CRR ) Cut of 50 Bps from 4.5 % to 4. What is the Cash reserve ratio: It is the percentage of bank deposits that a bank must keep aside with RBI in the form of cash balance for the stability of the banking system. The bank does not get any Interest on CRR deployed. How does CRR cut impact the country? - The CRR Cut will increase the liquidity of 1.16 lakh crore into the banking system and boost economic growth. - It is also expected that the bank's Net Interest Margin will increase slightly if all the funds are deployed for credit. Why CRR Cut? - The liquidity in the banking system has tightened because of RBI's action to stabilise the rupee against the dollar. - Q2 FY25 GDP has lowered to 5.4 % which is seven quarter low. Other Key Takeaways from MPC : - Repo rate to be Unchanged at 6.5%. - FY25 GDP growth has been revised to 6.6% from 7.2% - The CPI Inflation target has been raised to 4.8% from 4.5%.