Reserve Bank of India (RBI) Governor Shaktikanta Das announced the Monetary Policy Committee Meet 2024 decisions. The RBI kept the benchmark interest rate the same, focusing on controlling inflation after an unexpected election result. The MPC Meet 2024 met in Mumbai to discuss key policies.
Food inflation remains a concern, with prices rising 1.03% in urban areas and 0.59% in rural areas in April, leading to a national increase of 0.74%. Despite this, India’s retail inflation dropped to an 11-month low of 4.83% in April 2024, staying within the RBI’s target range of 2-6%.
RBI MPC Keeps Lending Rate Unchanged for Eighth Time
The Reserve Bank of India (RBI) has kept the key lending rate unchanged for the eighth time in a row due to strong economic growth, allowing them to focus on reducing inflation. RBI Governor Shaktikanta Das highlighted that India’s economy remains strong despite global crises. He emphasized the need to stay alert in an uncertain global environment.
The Monetary Policy Committee (MPC) kept the repo rate at 6.5%. The last change in rates was in February 2023. In the latest decision, four of six MPC members voted to keep the repo rate unchanged.
RBI Governor on Inflation and Economic Growth
RBI MPC Meet 2024 Governor Shaktikanta Das highlighted key points about the current economic situation:
- Fuel prices are decreasing, but food prices remain high.
- The RBI is focused on bringing inflation down to the 4% target.
- The Monetary Policy Committee (MPC) is cautious about external risks to inflation, especially from food prices.
- Monetary policy now has more flexibility to maintain price stability.
Governor Das mentioned that the balance between inflation and growth is improving. Growth is steady, and inflation is slowing, mainly due to lower core inflation, which hit its lowest level in April 2024. The IMD’s forecast of an above-normal southwest monsoon is expected to boost agricultural production.
With steady spending in urban areas, private consumption and investment activity are recovering. The second quarter of the current fiscal year might see a correction in retail inflation.
Indian Economy Shows Strong Growth and Resilience
RBI Governor Shaktikanta Das stated that if the economy grows by 7.2% this fiscal year, it will mark the fourth consecutive year of over 7% growth.
In 2024-25, domestic economic activity has remained strong. Manufacturing is growing due to strong domestic demand, with the 8 core industries showing good growth in April 2024. The Purchasing Managers Index (PMI) for manufacturing was strong in May 2024, the highest globally. The services sector is also performing well, with the PMI for services at 60.2 in May 2024, indicating strong growth.
Shaktikanta Das mentioned that the Indian economy is at a key turning point.
RBI to Maintain Flexibility and Focus on Stability
RBI Governor Shaktikanta Das announced in MPC Meet 2024 that the RBI will stay flexible in managing liquidity. The RBI is committed to maintaining stability in all financial markets and institutions it regulates. Governor Das emphasized the importance of a prudent balance between assets and liabilities and noted that customer protection is a top priority.
Regarding lending practices, Das pointed out that some regulated entities charge undisclosed fees and that interest rates from some non-banking financial companies (NBFCs) and microfinance institutions (MFIs) are excessively high.
The RBI plans to revise the definition of bulk deposits. For scheduled commercial banks (excluding regional rural banks) and small finance banks, bulk deposits will now be defined as single rupee term deposits of ₹3 crore and above. For local area banks, the limit will be set at ₹1 crore and above, similar to regional rural banks.
RBI to Simplify Forex Rules for Trade
RBI Governor Shaktikanta Das announced plans to simplify the Foreign Exchange Management Act (FEMA) guidelines related to exporting and importing goods and services. He also stated that India’s external sector remains strong, with key vulnerability indicators improving. The RBI is confident in comfortably meeting the country’s external financing needs.
RBI Introduces New UPI Lite Feature
The Reserve Bank of India (RBI) has kept its benchmark interest rate at 6.5%, focusing on inflation amid policy uncertainty after the recent election. The Monetary Policy Committee voted 4-2 to maintain the rate and continue its cautious policy approach. This decision comes after Prime Minister Narendra Modi’s party had a smaller-than-expected election victory, leading to a coalition government and potential changes in fiscal policy.
The RBI is also introducing an auto-replenishment feature for the UPI Lite wallet. This new feature will automatically reload the wallet when the balance falls below a user-set threshold. Currently, UPI Lite allows users to load up to ₹2000 and make payments up to ₹500 per transaction. The auto-replenishment feature will ensure users don’t have to manually reload their wallets, making payments easier and more convenient.
Also Read:
Top 9 Post Office Small Savings Schemes Offering Above 7% Interest Rates
RBI Transfers 1 Lakh Kg of Gold from UK to India Vaults
Get FD Rates Up to 8% Till June 30 with These Special Fixed Deposit Offers
