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RBI leaves policy rates unchanged, RBI Governor says war against inflation has to continue

Delivering the bimonthly Monetary Policy Statement of the RBI through the RBI’s YouTube channel today, the RBI Governor Shaktikanta Das has informed that the Monetary Policy Committee has decided unanimously to keep the policy repo rate unchanged at 6.50 per cent with readiness to act, should the situation so warrant. Consequently, the standing deposit facility (SDF) rate will remain unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.

The Governor observed that inflation is above the target and given its current level, the present policy rate can still be regarded as accommodative. Hence, the MPC decided to remain focused on withdrawal of accommodation.

Noting that economic activity remains resilient amidst global volatility, the Governor informed that India’s real GDP growth for 2023-24 is projected at 6.5 per cent, with Q1 at 7.8 per cent; Q2 at 6.2 per cent; Q3 at 6.1 per cent; and Q4 at 5.9 per cent.

The Governor informed that CPI inflation is projected to moderate to 5.2 per cent for 2023-24; with Q1 at 5.1 per cent; Q2 at 5.4 per cent; Q3 at 5.4 per cent; and Q4 at 5.2 per cent.

The RBI Governor announced five additional measures, as given below.

Developing an Onshore Non-deliverable Derivative Market

The Governor explained that banks in India with IFSC Banking Units (IBUs) were earlier permitted to transact in Indian Rupee (INR) non-deliverable foreign exchange derivative contracts (NDDCs) with non-residents and with other eligible banks having IBUs.

Now, banks with IBUs will be permitted to offer NDDCs involving INR to resident users in the onshore market. The Governor informed that this measure will further deepen the forex market in India and provide enhanced flexibility to residents in meeting their hedging requirements.

Enhancing Efficiency of Regulatory Processes

The RBI Governor informed that a secured web based centralised portal named as ‘PRAVAAH’ (Platform for Regulatory Application, Validation And AutHorisation) will be developed, to enable entities to apply for license / authorisation or regulatory approvals from the Reserve Bank. In line with the Union Budget 2023-24 announcement, this will simplify and streamline the current system, wherein these applications are made through both offline and online modes.

The Governor informed that the portal will show time limits for deciding on the applications/approvals sought. This measure will bring greater efficiencies into regulatory processes and facilitate ease of doing business for the regulated entities of the Reserve Bank.


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