RBI Monetary Policy -2024

New Delhi, February 2024.

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) has kept repo rates unchanged at 6.5 percent. It has also decided to remain focused on the withdrawal of the accommodative stance, Governor Shaktikanta Das said. This is the sixth consecutive unchanged decision and comes after the Interim Budget was announced on February 1, 2024.

“The announcement by the Reserve Bank of India (RBI) extending the Key Fact Statement (KFS) requirement to cover all retail and MSME loans will spearhead enhanced transparency in lending practices. The opaque nature of loan agreements, laden with hidden charges has been a challenge faced by MSMEs when seeking financial support from traditional sources,” said Sundeep Mohindru, Promoter & Director, M1xchange. 

Shanti Ekambaram, Whole-time Director Kotak Mahindra Bank Ltd” Said“ In line with the wider expectations, the MPC has maintained the status quo in both the policy rates and the stance of “ withdrawal of accommodation”. Though the CPI is pegged at 5.4% for FY’24, the expectation of inflation at 4.5% for FY’25 comes from the complete transmission of the 250 bps hikes so far, percolating fully into the economy.

The central bank has shown its nimbleness and readiness to tackle the surplus liquidity and reach the long-term objective of inflation at 4% levels on a durable basis. GDP growth is estimated at 7.3% for FY’24 – making it the third consecutive year of > 7% growth. Food remains the major risk element. Next year’s projection of 7% growth also shows the robust growth potential in India, driven by growing physical infrastructure, continued digitization and rising capex besides a steady urban consumption.

Fiscal consolidation cues in the Budget and the financial stability of the economy as seen by external and internal indicators are signs that the central bank may much comfort in. The overall domestic economic outlook exudes immense optimism as India continues to remain the bright spot in the world. ”

Hailing the Reserve Bank of India’s key announcement on Key Fact Statement (KFS) requirements for retail and MSME loans, Prashant Muddu, Managing Director & CEO, Jocata said the move will bring transparency within the credit system.