Mumbai: Delivering the bimonthly Monetary Policy Statement, the Reserve Bank of India (RBI) Governor Shaktikanta Das said that inflation was above the target but given its current level, the present policy repo rate could “still be regarded as accommodative”. Hence, the Monetary Policy Committee decided unanimously to keep the policy 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 though underlined that the fight against inflation was not yet finished. He informed that Consumer Price Index 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.
“Our job is not yet finished and the war against inflation has to continue until we see a durable decline in inflation closer to the target. We stand ready to act appropriately and on time. We are confident that we are on the right track to bring down inflation to the target rate over the medium term.”
Das informed that the Indian Rupee has moved in an orderly manner in the calendar year 2022 and continues to be so in 2023 also. This is reflective of the strength of domestic macroeconomic fundamentals and the resilience of the Indian economy to global spillovers. “Our external sector indicators have improved significantly,” he said and noted that the foreign exchange reserves had rebounded from US$ 524.5 billion on October 21, 2022, and now stood in excess of US$ 600 billion taking into account the forward assets.
“We remain firm and resolute in our pursuit of price stability,” he stressed and noted that while since early 2020, the world is going through a period of extreme uncertainty, “in this daunting environment, India’s financial sector remains resilient and stable”.
He added: “Overall, the broadening of economic activity; the expected moderation in inflation; the fiscal consolidation with focus on capital spending; the significant narrowing of the current account deficit to more sustainable levels; and the comfortable level of foreign exchange reserves are welcome developments which will further bolster India’s macroeconomic stability. This allows monetary policy to remain unwaveringly focused on inflation.”
The Governor underlined that with unyielding core inflation, India remains firm and resolute in its pursuit of price stability “which is the best guarantee for sustainable growth”. He noted that economic activity remained resilient amidst global volatility, and pointed out 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 RBI Governor announced five additional measures, as given below:
Developing an Onshore Non-deliverable Derivative Market
Das 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 the 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.
He said 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.
Development of a Centralised Web Portal for the Public to Search Unclaimed Deposits
The Governor noted that at present, the depositors or beneficiaries of unclaimed bank deposits of 10 years or more have to go through the websites of multiple banks to locate such deposits.
Now, in order to improve and widen the access of depositors/beneficiaries to information on such unclaimed deposits, it has been decided to develop a web portal to enable search across multiple banks for possible unclaimed deposits. This will help depositors/beneficiaries in getting back unclaimed deposits, said the Governor.
Grievance Redress Mechanism relating to Credit Information Reporting by Credit Institutions and Credit information provided by Credit Information Companies
Recalling that Credit Information Companies (CICs) were recently brought under the purview of the Reserve Bank Integrated Ombudsman Scheme (RB-IOS), Das announced that the following measures are going to be put in place:
- A compensation mechanism for delayed updation /rectification of credit information reports
- A provision for SMS/email alerts to customers whenever their credit information reports are accessed
- Timeframe for inclusion of data received by CICs from Credit Institutions
- Disclosures on customer complaints received by CICs
These measures will further enhance consumer protection, he said.
Operation of Pre-Sanctioned Credit Lines at Banks through the UPI
The Governor noted that the Unified Payments Interface (UPI) has transformed retail payments in India and recalled how UPI’s robustness has been leveraged to develop new products and features from time to time. The Governor announced that it has now been decided to expand the scope of UPI by permitting the operation of pre-sanctioned credit lines at banks through the UPI. This initiative will further encourage innovation, he added.
– global bihari bureau
