RBI, in its Monetary Policy Committee (MPC) meeting, retained the repo rate at 6.5% for the 11th straight time amidst high inflation and slowing economic growth. RBI Governor Shaktikanta Das also announced a reduced GDP growth projection for FY 2024-25 to 6.6%, down from 7.2%.
The economy witnessed a sharp slowdown, with GDP growth in the July-September quarter dropping to a seven-quarter low of 5.4%. Additionally, the Monetary Policy Committee (MPC) reduced the Cash Reserve Ratio (CRR) from 4.5% to 4%, releasing ₹1.16 lakh crore liquidity into the banking system.
Governor Das emphasized that this measure aims to support banks, enhance lending capacity, and manage inflation effectively. The decision underscores RBI’s cautious approach amid economic challenges.
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The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) concluded its meeting on Friday, maintaining key lending rates for the 11th consecutive time. Alongside the status quo on rates, the RBI announced several measures aimed at enhancing liquidity, financial inclusion, and technological adoption in the banking sector.
Reduction in Cash Reserve Ratio (CRR):
The RBI announced a phased reduction in the CRR by 50 basis points, lowering it to 4% of Net Demand and Time Liabilities (NDTL). This move is expected to release ₹1.16 lakh crore into the banking system, boosting liquidity and supporting economic growth.
Increase in Collateral-Free Agricultural Loans:
The RBI increased the limit for collateral-free agricultural loans from ₹1.6 lakh to ₹2 lakh. This move is designed to aid small farmers in accessing credit amid rising input costs.
Podcasts for Public Communication:
To improve public awareness, the RBI will launch podcasts focusing on policy updates, financial literacy, and economic insights.
Expanding FX-Retail Platform via Bharat Connect:
The FX-Retail platform, aimed at making foreign exchange transactions accessible to small businesses and individuals, will integrate with Bharat Connect. Initially piloting US dollar transactions, it will gradually expand to other currencies.
Pre-Sanctioned Credit Lines via UPI for Small Finance Banks (SFBs):
Small Finance Banks will now offer pre-sanctioned credit lines through UPI, enhancing credit accessibility for underserved segments and promoting financial inclusion.
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AI Tool to Identify Fraudulent Accounts:
RBI is piloting “MuleHunter.AITM,” an AI-based tool to detect fraudulent accounts. Early results indicate success, and banks are encouraged to adopt and enhance the technology.
Ethical AI Framework in Finance:
The RBI will establish a committee to develop guidelines for ethical AI usage in finance, focusing on fairness, data privacy, and reducing risks like algorithmic bias.
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