RBI keeps repo rate unchanged at 6.5%
Vijay C Roy
Tribune News Service
Chandigarh, August 8
The Reserve Bank of India (RBI) on Thursday kept the benchmark interest rate and stance unchanged at 6.5 per cent for the ninth straight policy meeting.
Four out of the six Monetary Policy Committee (MPC) members voted in favour of the rate decision. With repo rates unchanged, all external benchmark lending rates (EBLR) that are linked to the repo rate will not increase, giving relief to borrowers as their equated monthly instalments (EMIs) will not increase.
“Headline inflation, after remaining steady at 4.8 per cent during April and May 2024, increased to 5.1 per cent in June 2024, primarily driven by the food component, which remains stubborn.
“The expected moderation in headline inflation during the second quarter of 2024-25 is likely to reverse in the third quarter. Domestic growth, however, is holding up well on the back of steady urban consumption and improving rural consumption, coupled with strong investment demand,” said RBI Governor Shaktikanta Das in his monetary policy statement.
Amid this confluence of factors, the MPC judged that it is important for monetary policy to stay the course while maintaining a close vigil on the inflation trajectory and the risks, said Shaktikanta Das. According to the policy, the domestic economic activity continues to be resilient.
The forecast for India’s economic growth in FY25 remains unchanged at 7.2 per cent, said the statement. The growth rate projected is slightly more than the economic survey’s expectation of 6.5-7%. Also, the growth for the first quarter of the next financial year was projected at 7.2 per cent. The MPC projected the inflation at 4.5 per cent for FY25 same as the previous projection. The inflation for the first quarter of the next financial year was projected at 4.4 per cent.
Das said food inflation, which has a weight of 46 per cent in the headline inflation, cannot be ignored. High food prices likely continued in July, reflected in the revision in the inflation forecast for the second quarter of the current financial year.
On ongoing stock market volatility, the governor said, “It would be important for market participants to keep in mind the strength of India’s macroeconomic fundamentals, which remain robust. India has built strong buffers that impart resilience to the domestic economy from such global spillovers.”
Public repository of digital lending apps proposed
To address the problems arising from unauthorised digital lending apps (DLAs), the RBI proposes to create a public repository of DLAs deployed by its regulated entities.
The regulated entities (REs) will report and update information about their DLAs in this repository. This measure will help the consumers to identify the unauthorised lending apps.
Continuous clearing of cheques on the cards
At present, cheque clearing through Cheque Truncation System (CTS) operates in a batch processing mode and has a clearing cycle of up to two working days.
It is proposed to reduce the clearing cycle by introducing continuous clearing with “on-realisation-settlement” in CTS. This means that cheques will be cleared within a few hours on the day of presentation.
