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RBI’s Monetary Policy (April 06, 2023): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on April 06, 2023. Here are some of the highlights of the monetary policy announcement.

Rates and reserves

 

ChangeRevised rate
Policy repo rateUnchanged6.50%
Standing deposit facility (SDF) rate6.25%
Marginal standing facility (MSF) rate6.75%
Bank rate6.75%

Monetary policy stance

  • Withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

Economy 

 

GDP growth projectionCPI inflation projection
FY 2023-246.5%5.2%
Q1 of FY 2023-247.8%5.1%
Q2 of FY 2023-246.2%5.4%
Q3 of FY 2023-246.1%5.4%
Q4 of FY 2023-245.9%5.2%
  • The banking and non-banking financial service sectors in India remain healthy and financial markets have evolved in an orderly manner. 
  • Economic activity remains resilient and real GDP growth is expected to have been 7% in 2022-23. 
  • Consumer price inflation, however, has increased since December 2022, driven by price pressures in cereals, milk and fruits. Core inflation remains elevated. Headline inflation is projected to moderate in 2023-24.
  • Indian Rupee has moved in an orderly manner in the calendar year 2022 and continues to be so in 2023 also.
  • Foreign exchange reserves have rebounded from US$ 524.5 billion on October 21, 2022 and now stand in excess of US$ 600 billion.

Other measures

  • Banks in India which operate International Financial Services Centre (IFSC) Banking Units (IBUs) were permitted to transact in Indian Rupee (INR) non-deliverable foreign exchange derivative contracts (NDDCs) with non-residents and with each other. The banks with IBUs will now be permitted to offer NDDCs involving INR to resident users in the onshore market. These banks will have the flexibility of settling their NDDC transactions with non-residents and with each other in foreign currency or in INR while transactions with residents will be mandatorily settled in INR.
  • The processes for entities to make applications seeking license / authorisation or regulatory approvals from RBI under various statutes / regulations take place in both online and off-line modes. To simplify and streamline such processes and in line with the Union Budget 2023-24 announcement, a secured web based centralised portal named as ‘PRAVAAH’ (Platform for Regulatory Application, Validation And AutHorisation) will be introduced. The portal will show time limits for deciding on the applications / approvals sought. 
  • The depositors / beneficiaries of unclaimed bank deposits of 10 years or more have to go through the websites of multiple banks to locate such deposits. To improve and widen the access of depositors / beneficiaries to information on such unclaimed deposits, a web portal will be developed to enable search across multiple banks for possible unclaimed deposits. 
  • Credit Information Companies (CICs) were brought under the purview of the Reserve Bank Integrated Ombudsman Scheme (RB-IOS). The following measures will now be put in place –
    • Compensation mechanism for delayed updation / rectification of credit information reports.
    • 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.
  • RuPay credit cards were permitted to be linked to UPI. This was in addition to the existing facility of linkage of UPI with deposit accounts. The scope of UPI will now be extended by permitting operation of pre-sanctioned credit lines at banks through the UPI. 


References

Reserve Bank of India. (2023, April 06). 'Governor’s Statement'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55471

Reserve Bank of India. (2023, April 06). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55473


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