RBI Monetary Policy- Today’s policy decision is a pause, not a pivot, says Shaktikanta Das


New Delhi, April 06, 2023.

The RBI monetary policy committee (MPC) decided to keep the policy repo rate unchanged at 6.50 per cent and other policy rates were also kept unchanged. “The monetary policy committee decided unanimously at 6.50 per cent with a readiness to act if the situation so warrants,” Das said. The RBI Governor also said that the withdrawal of accommodation and that the repo rate hike has been paused only for this meeting.

Even as the fate of his decision to fully write off ₹8,300 crore of outstanding additional tier 1 (AT1) bonds of Yes Bank as part of its rescue is pending before the apex court, RBI Governor Shaktikanta Das on Thursday defended the debt instrument as a globally legitimate one.

“The AT1 bonds ecosystem remains quite robust, quite stable. And it is a part of the Basel III regulations and we have adopted that in our country as well. And there is nothing more really I’d like to say on this,” Das told reporters at the customary post-policy presser

“When banks sell such bonds, the terms and conditions are given out clearly and investors, who are mostly ultra-high networth individuals, are expected to read the terms and conditions.”

Ms. Shanti Ekambaram, Whole-time Director, Kotak Mahindra Bank

“The “Pause” on the repo rate has surprised the market players and it is much welcome given the intense volatility in the global financial markets and the positive real interest rates in India. The Governor has clearly emphasized that the pause is to assess the impact of the cumulative 250 bps rate hikes so far but remains committed to inflation targeting and bringing it within the tolerance range. The economic growth estimate at 6.5% for FY’24 is marginally higher than the previous estimates. The RBI is likely to watch the evolving global growth risks, the upcoming monsoon season, and the inflation data before deciding on further action – whether to extend the pause or to act. Overall, we expect rates to remain stable which would augur well for the economy.”

Mr. Manish Kothari, President & Head – Commercial Banking, Kotak Mahindra Bank Limited

“Very balanced and prudent approach taken by RBI in deciding to pause, keeping in mind both inflation control (price stability) & supporting GDP growth (financial stability). At the same time, reiterating & reinforcing the fact that sticky inflation & international markets will continue to be closely watched by them for future decisions – hence, keeping their options open. I believe, easing global situation, including some cool-off in inflation, leading to possibility of slower Fed hikes + domestically, a reasonably comfortable CAD & Forex Reserves position + overall consumption demand still in the positive territory – led the MPC to take this decision! Two key things to watch out for – unfolding of the monsoon (El Nino effect) and financial stability of the global markets. As things stand, I am hopeful that this rate hike pause will help in creating a positive mindset (in general), which can lead to some growth in both, investment & consumption demand. Also, this being an election year + a strong capex expenditure budgetary plan announced by the Govt. should aid this.”


Mr. Virat Diwanji, Group President & Head- Consumer Bank, Kotak Mahindra Bank

“With a lesser expected “pause” in the policy rate hikes, the RBI has given priority to financial stability and economic growth while firmly underlining that it is ready to act if its reading changes at any time. Further, through a soothing commentary, the central bank seems to have sent positive signals to almost all sections of the economy. Though headwinds like higher crude prices, a sketchy monsoon, and further deterioration in the global financial system are being anticipated, for the moment, India’s key economic growth indicators seem to be positive and manageable. While we expect another hike to be delayed at least for another 2-3 quarters, the RBI will be guided by the cumulative effect of all precious hikes