RBI’s Bi-Monthly Monetary Policy Dt. 8th February 2024 – Key Highlights

The Monetary Policy Committee (MPC) met on 6th, 7th and 8th February, 2024. The RBI MPC announcements came after the presentation of the Interim Budget by finance minister Nirmala Sitharaman.

After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, MPC decided by a 5 to 1 majority to keep the policy repo rate unchanged at 6.50 per cent. Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. The MPC also decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. This is the sixth consecutive unchanged decision and comes after the Interim Budget was announced on February 1, 2024.

Rationale for these decisions.
The momentum in domestic economic activity continues to be strong. Headline inflation, after moderating to 4.9 per cent in October, rose to 5.7 per cent in December 2023. This was primarily due to food inflation, mostly vegetables. The softening in core inflation (CPI inflation excluding food and fuel) continued across both goods and services, reflecting the cumulative impact of monetary policy actions as well as significant softening in commodity prices. The uncertainties in food prices, however, continue to impinge on the headline inflation trajectory. Taking into account this growth-inflation dynamics and the fact that transmission of the cumulative 250 bps policy rate hike is still underway, the MPC decided to keep the policy repo rate unchanged at 6.50 per cent. The MPC will carefully monitor any signs of generalisation of food price pressures which can fritter away the gains in easing of core inflation. Monetary policy must continue to be actively disinflationary to align inflation to the target of 4 per cent on a durable basis. The MPC will remain resolute in this commitment.
The MPC also decided to remain focused on withdrawal of accommodation to ensure fuller transmission and anchoring of inflation expectations.

The RBI conducts six bimonthly meetings in a financial year to deliberate  interest rates, money supply and inflation outlook. The February MPC holds even more significance as it is the final one for the current financial year.

Governor Shaktikanta Das highlights nine points in the press conference:
First, domestic economic activity continues to be strong. We expect the real GDP to grow by 7% in the next financial year 2024-2025.
Second point, CPI inflation inflation is moderating with intermittent interruptions and spikes. We have to remain vigilant about the incoming data and the outlook. Our endeavour to achieve 4% inflation on a durable basis has to continue.
Third, Globally, markets are front-running central banks in anticipation of policy waivers, but central banks remain apprehensive and await or more durable alignment of inflation with the targets for liquidity will be actively managed by the Reserve Bank.
Fourth, Domestic economic activity remains strong. The first advance estimates (FAE) placed the real gross domestic product (GDP) growth at 7.3 per cent for 2023-24, marking the third successive year of growth above 7 per cent.⁶Five, our multi-pronged proactive and calibrated policies have worked well to maintain and strengthen macroeconomic and financial stability.
Six systemic, sectoral and institution-specific signs of stress are being proactively monitored and acted upon wherever necessary.
Seven let me reiterate that good governance robust risk management, sound compliance culture and prediction of consumer customers' interest are the hallmarks of the Reserve Bank's approach to the safety and stability of the financial system and individual financial institutions. the regulated entities must accord the highest priority to these aspects.
The eighth point is the external sector of the economy remains resilient. The current account deficit is expected to be eminently manageable.
Nine, the exchange rate of the Indian rupee has remained stable.

Key takeaways from Monetary Policy:

1. India's potential growth is propelled by structural drivers. Growth is accelerating and outpacing most analysts' forecasts. Global growth expected to remain steady in 2024, said Das.
2. RBI projects real GDP growth of 7% for FY'25 with risks evenly balanced. For FY24Q1 is projected at 7.2%; For FY24Q2 is projected at 6.8%; For FY24Q3 is projected at 7%; For FY24Q4 is projected at 6.9%.
3. Inflation is on a downward trajectory, says RBI Guv. Headline inflation moderated to 5.5% in April -December 2023, from 6.7% in FY23. Headline CPI inflation for FY24 is at 5.4%, with projection for FY24Q4, the current quarter at 4 5%.
4. Das raised concern on elevated debt. Elevated debt is raising serious concern in many countries, it will impact future global financial system, said Shaktikanta Das. On the domestic economic activity front, he added that the momentum remains strong and is expected to continue in FY25.
5. Review of regulatory framework for electronic trading platforms - A revised regulatory framework for electronic trading platforms will be issued for stakeholders feedback
6. Hedging of gold price risk in OTC market in IFSC - It is now decided to also allow resident entities to hedge the price of gold in the OTC segment in the IFSC
7. Key Fact Statement for retail & MSME loans and advances - To enhance transparency in disclosure of various charges fees, etc the RBI had mandated certain categories of lenders to provide the borrower a key fact statement (KFS) containing essential information as all inclusive annual percentage rate and details of recovery and grievance redress mechanism. The requirement of KFS is now being extended to cover all retail and MSME loans.
8. Enhancement of AePS- Proposed to streamline the process for onboarding of AePS service providers & introduce some additional fraud risk management measures.
9. Principle-based framework for authentication of digital payment transactions- To facilitate adoption of alternative authentication mechanisms for enhancing security of digital payments, proposed to put in place a principal-based framework for authentication of such transactions.
10. Introduction of programmability and offline functionality in CBDC pilot projects - Its now proposed to enable additional functionalities of programmability and offline capability in CBDC retail payments.
11. Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted to keep the policy repo rate unchanged at 6.50 per cent. Prof. Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points.
12. Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. Prof. Jayanth R. Varma voted for a change in stance to neutral.
13. The minutes of the MPC’s meeting will be published on February 22, 2024.
14.  The next meeting of the MPC is scheduled during April 3 to 5, 2024.

Please click on the following link to read: Governor’s Statement: February 8, 2024 &  Monetary Policy Statement, 2023-24 Resolution of the Monetary Policy Committee (MPC) February 6 to 8, 2024

Opinion of Various Experts:

MPC Meeting 2024 Live: RBI remains a bit conservative while trying to balance inflation, says TRUS Mutual FUnd CIO

RBI MPC Meeting 2024 Live: "The Monetary Policy Committee (MPC) convened against a backdrop of softening headline inflation, stable core inflation, and a budget that is both fiscally prudent and non-inflationary. On the global front, recent data points to continued robustness of growth against general expectations of a slowdown. The US Fed removed the tightening bias from its statement leading to a question of when the rate cut cycle begin. Geopolitical unrest in the middle east and Red Sea region continue to possess key risks to fledgling global recovery.

Indian MPC thus maintained a status quo on rates as well as its stance (withdrawal of accommodation) as it believes the transmission of past rate hikes remains incomplete and the 4% CPI target may still be a bit distant. The MPC has projected FY25 GDP at 7.00% (FY 24 7.3%) and CPI at 4.5% (FY24 5.4%) reflecting a strong economic growth with easing inflation trajectory. The risks to these come from volatile food prices and potential supply side shocks from global factors. Overall the RBI remains a bit conservative while trying to balance the growth-inflation balances," said Mihir Vora, CIO, TRUST Mutual Fund.

RBI decision to have a key fact statement related to retail and MSME advances will empower customers, says SBI Chairman

RBI MPC Meeting 2024 Live: “The MPC decision to hold rates and stance was expected but the set of regulatory decisions holds out a pragmatic and steadfast approach in the quest for digital robustness, customer centricity and price discovery. The decision to have a key fact statement regarding retail and MSME advances will empower customers to make informed decisions. Enhancing the robustness of AePS, authentication of digital transactions through new mechanisms and operational changes in CBDC are all important milestones of systemic resilience and a better future," said Chairman of SBI Dinesh Khara.

RBI MPC was dovish in its stance, says PGIM India MF's Puneet Pal

RBI MPC Meeting 2024 Live:  “The MPC meeting today maintained the status quo on policy rates and the monetary policy stance. Some sections of the market were expecting a change in stance which did not materialize though, in our view, the policy was dovish as Prof Jayant Varma voted for a rate cut and with the governor highlighting the underlying financial stability and FY25 Inflation forecast at 4.50% which is 200 bps below the policy repo rate. We think the monetary policy stance will be changed in the next MPC Policy in April 2024," said Puneet Pal, Head- Fixed Income, PGIM India Mutual Fund.

As inflation nears RBI's 4 per cent goal, there is room for monetary easing in coming quarters, AU Small Finance Bank

RBI MPC Meeting 2024 Live: "RBI’s policy was on expected lines with focus on bringing inflation towards targeted range of 4 per cent. Monetary policy stance and steady rates over last one year have helped maintain healthy growth momentum while lowering inflationary pressures. Going forward we believe as inflation nears RBI’s 4 per cent goal, space for monetary easing would open up in the coming quarters, to support lower interest rates and credit demand," said Uttam Tibrewal, Executive Director, AU Small Finance Bank.

RBI still concerned with the elevated food inflation, uncertainties about fuel inflation, says Resurgent India MD

"On expected lines, The RBI has maintained the status quo without any change in the repo rate. Given the lower government fiscal deficit as announced in the interim budget, a change in the stance to neutral was expected but RBI has chosen to be cautious and even the stance has not been changed. This indicates that RBI is still concerned with the elevated food inflation, uncertainties about fuel inflation and the supply side constraints due to the current geo-political situation. The reduction if any in the repo rate is therefore likely to be postponed to the later half of the next financial year specially because the overall headline inflation is now projected at 4.5 %for the full next financial year.

The GDP growth rate now projected at 7% for the next financial year augurs well for the economy based on better Rabi crop and demand lead growth duly backed by FDI and PLI policies. To support the same in the growth inflation trade a dovish stance is however expected soon, once the transmission of the previous repo rates increase is complete.

On the liquidity front, the assurance of RBI to be quick and flexible in providing the requisite amount in the system is a positive sign taking into the pick-up seen in credit growth in the last quarter and the extra need for currency in circulation during elections.

The RBI governor has also underlined the need to focus on customer requirements both from a regulatory angle as also by use of technology and innovation including digital currency.

Overall a pragmatic approach seen in policy with an aim to ensure long term sustainable development while controlling the inflation in the current scenario," said MD at Resurgent India Jyoti Prakash Gadia.

RBI likely to begin rate cuts in the second half of CY 24, says Millwood Kane International CEO

Founder and CEO of Millwood Kane International, Nish Bhatt expressed that RBI is likely to begin rate cuts in the second half of CY 24.

“The Reserve Bank of India (RBI) retained the key lending rate, repo, at 6.5% marking it the sixth consecutive policy review of no rate action. There was no change in stance of ‘withdrawal of accommodation’, indicating that the RBI is not yet ready to lower the guard against the retail inflation till it aligns with the committed target of 4 percent in a timely and sustainable manner. The CPI for FY24 is projected at 5.4%, while its likely to be at 4.5% in FY25. While, RBI has pegged real GDP growth for FY25 at 7%.

As the expectation is that headline inflation will moderate in the coming months, and there are concerns around continued high systemic liquidity deficit, while money markets continue to remain elevated and moderation happening in global inflationary pressure from last year’s high, we may likely see some rate cuts actions by RBI in the latter half of CY24," said Nish Bhatt.

George Alexander Muthoot, MD, Muthoot Finance

"We appreciate the RBI’s prudent decision to keep the repo rate unchanged at 6.5% and maintain their stance on ‘withdrawal of accommodation’ to align with the evolving growth-inflation dynamics and remaining focussed on ensuring sustainable growth for the Indian economy. This may keep interest rates slightly elevated in the economy and on credit to small businesses. We remain optimistic on gold loan demand, credit demand from MSMEs, Microloans and demand for housing loans, given India’s resilient domestic economy, government thrust on capex, strong urban consumption and pick up in rural demand.

The RBI has further announced an important measure to ensure greater transparency for retail and MSME borrowers. The regulated entities are required to share a detailed document called Key Fact Statement (KFS), listing all the key information regarding a loan agreement. As an NBFC adhering to compliance, corporate governance and taking proactive measures to safeguard the interest of our customers is of prime importance to us, and we welcome this move as it will encourage and enable the borrowers to make informed decisions."

Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company

"Despite slight volatility in January, the market closed flat on a month-to-month basis. Equity schemes experienced a surge in inflows, reaching approximately ₹21,780 crores in Jan’24, compared to ₹16,997 crores in Dec’23. Sectoral/thematic and small-cap oriented funds were the primary contributors, with contributions of ₹4,804 crores and ₹3,256 crores, respectively. However, this was lower than the previous month's flows. Multi-cap category funds also witnessed a significant increase, reaching ₹3,038 crores in Jan’24 from approximately ₹1,852 crores in Dec’23. Large caps demonstrated positive contributions this month, reversing the net outflows experienced in December 2023. This shift in trend is in line with valuation differentials among large v/s mid and small caps, suggesting that large caps/flexi caps oriented schemes may attract higher flows in the future. In the Hybrid category, MAF observed notable inflows of ₹7,079 crores, a significant increase from ₹2,420 crores in the previous month.

Overall, investor sentiment remained bullish, supported by the market's persistent strength. Market and investor sentiment leading up to the general elections year remain positive."

Murthy Nagarajan, Head-fixed income, Tata Asset Management

"RBI in its monetary policy has kept the CPI Inflation target for next year at 4.5%. The potential GDP growth seems to be above 7% as RBI has projected growth of 7% even when global growth is slowing. As capex increases in the economy, we feel we may have a potential growth rate of 8% with CPI inflation around 4%. The government along with RBI is working together to have high growth and low inflation in the coming decades, which auger well for our economy. On the liquidity front, they have stated they will be doing a two-way operation to keep liquidity in balance, they are aiming for overnight rates to trade around policy rates of 6.5% as the RBI stance continues to be the withdrawal of accommodation. Given the geo-political uncertainty, RBI does not want to lower its cautious stance and put the Target of CPI inflation of 4 percent at risk.

The debt market has reacted slightly negatively due to no statement of easing liquidity, but the long-term positive lies in their commitment to bring CPI inflation to a 4% level. We should see 10-year yields going down to 7% in the coming days as monthly CPI inflation cools down below 5% in following months."

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers

"Quick take: RBI keeps rates unchanged at 6.5% along with the withdrawal of accommodation. Unlike market expectations, RBI's tone was not dovish. Das was clear that tail risks have the possibility of undoing the work on disinflation. With RBI's inflation projection of 4.5% for FY25, any expectations of cuts coming in the current year become unlikely. We think the progress in food prices will be the key monitorable for RBI's tone in the upcoming policy. Like other central banks, higher growth for the current and next year gives RBI more headroom to be on a wait-and-watch mode.

- RBI kept repo rates unchanged at 6.5% sighting above 4% inflation along with incomplete transmission of rate hikes in credit markets as key reasons.

- On the inflation front, while Das highlighted comfort in the progress in rabi sowing, tail risks emerging from Red Sea skirmishes having an impact on commodity prices and the possibility of weather-related disruptions would be important to watch for.

- RBI re-affirms India's growth outlook projecting FY25 growth at 7%. For the current year, the domestic economy is maintaining its growth momentum driven by strong investment from the public sector along with an upturn in the private capex cycle. Agriculture too is maintaining its growth momentum on account of strong rabi sowing.

- Withdrawal of accommodation on the liquidity front as the transmission of rates to credit markets was incomplete. Further, acknowledging durable liquidity remained positive on account of government cash balances, RBI would remain nimble with its operations relying on VRR & VRRR for fine-tuning operations."

Raghvendra Nath, MD, Ladderup Wealth Management

"The outcome of the three-day Monetary Policy Committee meeting aligns with our expectations, as the repo rate remains unchanged at 6.5% and a continued effort towards reducing money supply in the economy is maintained. The cumulative effect of policy repo rate increases is still working its way through the economy through a gradual decline in inflation numbers, but geopolitical events and their impact on supply chains and commodity prices are key sources of upside risks to inflation. Although no specific timeline has been indicated for reducing repo rates, it is anticipated that the Reserve Bank of India will initiate this process only after observing a similar move by the United States, aiming to mitigate the risk of capital outflows from India."

Shishir Baijal, Chairman and Managing Director, Knight Frank India

“The central bank’s decision to maintain a pause in policy repo rate is in line with our expectation, and we consider this a comforting signal for the industry. Even though the inflationary pressures in most consumption categories have ebbed, food inflation continues to remain volatile. The RBI continues to remain watchful of inflationary expectations and liquidity conditions, which are currently in deficit, and it may continue to further tighten the liquidity condition to rein in inflation. The fiscal consolidation plan outlined in the interim budget announcement, aiming to gradually reduce fiscal deficit to 4.5% over the next two years, also provides a buffer against potential inflationary pressure. All these measures have the potential to bring down inflation to the 4% target of the RBI which will be comforting for the central bank to gradually pivot with a rate cut. In the case of the country’s housing market, even as the mid and premium segment continue their growth trajectory, the lower segment has witnessed pressure from elevated interest rates and higher property prices. We believe that lower home loan interest rates in the near future will serve as a big boost to homebuyer sentiment and enable better affordability, which is an extremely sensitive factor in this segment of the housing market."

Nikhil Gupta, Chief Economist, MOFSL Group

"The RBI has kept monetary policy unchanged, as broadly expected, with no change in interest rates or policy stance (Both with 5-1 voting.) Further, the Governor again emphasized the importance of achieving a 4% inflation target.

The Bank forecasts real GDP growth at 7% in FY25, with inflation at 4.5% vs. 7% and 5.4%, respectively in FY24. (FY25 growth forecast has been revised up, keeping inflation broadly unchanged.)

Overall, there were no major announcements, hinting at an imminent easing. The RBI has been managing daily liquidity with overnight infusion, as and when required. We don't see easy monetary policy anytime soon, especially with such strong growth."

Ranen Banerjee, Partner and Leader Economic Advisory, PwC India on MPC Meeting

"The MPC decision to keep the policy rate unchanged was expected. The stance is also kept at the withdrawal of accommodation possibly is a surprise. This possibly is explained by the fiscal consolidation with the Government projecting a lower deficit than target in FY24 and an aggressive 5.1% deficit target for FY25. The lower government borrowings and higher international money allocations to Indian bonds owing to the inclusion of India in the JP Morgan Emerging Markets bond index will keep a downward bias on the yields. The growth momentum is also holding up and inflationary risks are still on the horizon. The MPC therefore has decided to conserve its rate and stance gunpowder at this stage."

Dr Niranjan Hiranandani, MD, Hiranandani Group

"The status quo in repo rate by RBI is governed by a mix of global and domestic factors reflecting better anchoring of inflation and nimble liquidity management. With an outpaced GDP growth and a downward inflation curve trajectory, India's economic performance is noteworthy despite geo-economic shocks. Development of infrastructure, increased labour employment, enhanced fiscal expenditures, improved governance, and regulations along with structural policy reforms reflect the RBI's multifaceted approach to strengthening India’s financial stability. RBI indicates emphasises the need to consider macro-economic broad risk factors while keeping customer-centricity in mind while deploying effective monetary policy. Hence, retaining an accommodation stance even under the benign geo-political mood is a step in the right direction."

Further expressing his views on the real estate industry, he stated “The uptick in new project launches, fresh supply of housing units, soaring sales in luxury housing, record high property registrations, and an average price appreciation of 7% demonstrates the strong real estate market performance index in the backdrop of a conducive market scenario. An increase in government capital expenditures towards building physical infrastructure and fuelling liquidity management will continue to boost construction activities. This will increase employment, growth in GDP, housing demand, and economic stimulation. Industry highly recommends differential policy treatment to combat negative growth in the affordable housing segment. A calibrated approach including fiscal intervention, tax exemption or cross-subsidization is necessary to restore growth in affordable housing".

Anil Rego, Founder and Fund Manager at Right Horizons

"In December 2023, the annual retail price inflation in India increased to 5.7%, as opposed to the 4.9% recorded in October. Headline inflation is still impacted by food price uncertainty. The MPC is still committed to keeping inflation within the 4 percent target range.

The Gross Domestic Product (GDP) increased by 7.3%, marking the third successive year in a row. The Monetary Policy Committee has maintained the status quo on the repo rate as inflation moderates in a resilient growing economy.

Since inflation is moderating, economic activity is steady and oil prices are lower and India is poised to be the growth engine for the global economy the markets were expecting the repo rate to be unchanged at 6.5%. We believe markets in the near term will now be driven by upcoming earnings season and 2024 elections.

Markets have touched new highs, especially with earnings for the Q3FY24 coming healthy supporting the trajectory. Investors are bullish as they are favouring rate cuts in 2024 which will unanimously boost the equity markets. The banking sector is the most sensitive to changes in rate cycles and has been a major reason for incremental earnings in FY23 and in H1 of FY24 benefitting from the hikes and credit growth being robust and persistent. Prolonged rate cuts will eventually lead to narrowing NIM but we expect rate cuts to begin in the last quarter and hence the trend in the banking sector is likely to continue in FY24. NBFCs will be best positioned to benefit from cuts in rates as credit growth will improve followed by banks. Also, credit-sensitive sectors like auto and real estate will see higher demand."

Divam Sharma, Founder and Fund Manager at Green Portfolio

"As we had expected, the central bank has kept the repo rate unchanged maintaining the status quo. This has come following the global cues as food inflation stays high but overall inflation remains stable.

The GDP forecast has been raised for the first quarter of FY25 to 7.2% following how the Indian economy has been growing beyond expectations.

An unchanged repo gave way for some fleeting enthusiasm for the markets but we don't see much significant impact, particularly in the long run. Equity investors should remain cautious as markets are volatile and this volatility is expected to continue."

Anirudh Garg, Partner and Fund Manager at Invasset on RBI MPC announcements

"In today's monetary policy announcement, the Governor of the Reserve Bank of India emphasized two critical points. First, he highlighted the optimistic outlook for India, with robust growth projections and inflation being effectively managed. The decision to maintain a steady monetary stance is driven by a couple of strategic considerations. Firstly, with upcoming elections, it's imperative to avoid inflationary pressures to ensure economic stability. Secondly, in light of the US Federal Reserve's decision to maintain its current interest rates, any reduction in rates by India could lead to a significant depreciation of the Indian Rupee. This careful approach underscores the RBI's commitment to balancing growth aspirations with macroeconomic stability, particularly in the context of global financial dynamics."

Sonam Srivastava, Founder and Fund Manager at Wright Research

"With the decision to keep interest rates unchanged, the RBI aims to strike a balance between controlling inflation and supporting economic growth. This steady stance provides clarity and stability for investors and businesses, fostering an environment conducive to investment and planning.

For the financial markets, particularly the bond and equity markets, the unchanged interest rates signal continuity in borrowing costs, influencing investor sentiments. Equity markets may experience a boost as lower borrowing costs encourage corporate investments and consumer spending, potentially leading to higher stock valuations. However, bond markets might exhibit a subdued reaction as expectations for rate cuts are postponed.

In sectors sensitive to interest rate movements, such as real estate and automobiles, the unchanged policy could offer relief by maintaining affordability for borrowers. Additionally, sectors reliant on consumer spending, like retail and hospitality, may benefit from sustained consumer confidence resulting from stable borrowing costs.

Overall, the RBI's policy decisions are anticipated to provide stability and support economic recovery, although the exact impact may vary across different segments of the economy. Investors and businesses alike will closely monitor subsequent developments to navigate their strategies in response to evolving market dynamics."

Mukesh Kochar, National Head of Wealth at AUM Capital

"The MPC outcome is on expected lines only. RBI will continue to focus on aligning inflation towards its target of 4% which is expected to be attained by the June-August. Inflation expectations for Q4 and Q1 have also been reduced. So the market may discount a rate cut possibility during the end of the 2nd quarter or 3rd quarter. Both the debt market and equity market may discount a rate cut possibility during the end of the 2nd or 3rd quarter.

The tight liquidity in the banking system may continue for some more time as the focus is on bringing down inflation towards 4%. Increased public debt globally has been cited as a concern and which is very important."

Aalesh Avlani, Executive Director & Co-Founder, Credit Wise Capital

"The RBI MPC's decision to uphold the repo rate at 6.5% underscores a prudent stance towards economic stability. Amidst this backdrop, digital lending emerges as a catalyst for stimulating consumer expenditure and supporting the automotive sector. This trend was evident in the last few quarters too, including the festive period, where enhanced affordability in financing options spurred sales growth. We remain optimistic about the future as we navigate these favourable conditions and continue to drive forward".

Anitha Rangan, Economist, Equirus

"In the last policy for this fiscal year, RBI has kept policy unchanged as expected. However, the decision is not unanimous with a 5-1 vote. No change in stance. The policy estimates a strong revision in growth for FY25 to 7% from 6.5% (Q1-Q3FY25) in the previous policy. Alongside, inflation is moderately revised downwards to 4.5% from 4.6% in the same period. The governor in his speech noted that the “job is not yet finished" with a 4% target in mind. While batting for India’s resilience amidst global volatility, it appears that RBI is not in discussion for rate cuts as a) 7% growth is very strong and does not require rate support b) Inflation is subject to food price risks and 4.5% is not 4% on a durable basis. Also no giveaways on liquidity. In the quest to preserve the strength and bat for long-term growth, RBI will rather look to maintain vigil and not in any rush to cut rates. The 7% growth does not seem to need the central bank’s nudge".

Sunil Nyati, Managing Director of Swastika Investmart

"The RBI keeps interest rates unchanged, as expected, but the tone is still cautious about inflation, and there are no indications of an interest rate cut in the near term, while the market was expecting a dovish stance after the government kept the fiscal deficit at 5.1% in the budget. The market didn't react much to it, but the bias is bullish, so we can expect the bank nifty to catch up in the medium term.

Technically, 22125 is acting as an immediate hurdle; above this, we can expect a rally towards 22222 and 22350 levels. On the downside, a 20-DMA of 21670 is a strong support level.

Bank nifty has formed a bottom 45500–44800 zone; however, a 20-DMA of 46300 is an immediate resistance; above this, we can expect a rally towards the 46800–47000 zone."

RBI’s restrictions on Paytm Payments Bank due to persistent non-compliance: Dy Governor

The Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank’s business were a result of persistent non-compliance with the regulatory norms, said the deputy governor of the central bank. In a post-policy press briefing, RBI Deputy Governor Swaminathan J said that the central bank will take suitable steps as warranted going ahead.
On his part, RBI Governor Shaktikanta Das said the move was a "supervisory action on a regulatory entity for persistent non-compliance and comes after long-term dialogue. It is incumbent upon us to protect the consumer and financial system."  Das added that "emphasis is on bilateral engagement with regulated entities, and restrictions are proportionate to the gravity of the situation. All actions are in the best interest of systemic stability and customers/depositors interest."

Das added that an FAQ will be issued sometime next week, addressing all queries. He also stressed that RBI is and will continue to encourage innovation and tech in the financial sector.

Source:  rbi.org.in, Money Control, Livemint, Economic Times