RBI MPC Meeting 2023 Updates – Financial Roundup

RBI MPC Meeting 2023 Updates - Financial Roundup

Commodity Samachar – The RBI MPC meeting 2023, held on August 10th at 10 AM, presented a cluster of key information that paves the way for the future of the financial sector. 

From repo rates, and inflation data to new unique policies for ease of payment, interesting information has been presented. 

Let’s examine the news that has been presented by the RBI. 

RBI MPC Meeting Live Update:

10:00 AM:

The RBI Governor Shaktikanta Das said, “Indian Economy is contributing 15% towards the global growth”. he further went on to say “The Indian economy is continuing to grow at a reasonable pace. India’s strong fundamentals have laid the foundation for sustainable growth. India could potentially become the new growth engine for the world. “

10:04 AM:

The Repo rate remains unchanged

The Monetary policy committee voted to leave the repo rate unchanged at 6.5 per cent. 

The Standing Deposit Facility rate also was retained at 6.25 per cent

Marginal Standing Facility rate, Bank Rate also retained at 6.75 per cent

MPC also decided to remain focused on the withdrawal of accommodation with an anticipatory measure to act should the situation so warrant

10:07 AM:

RBI Governor says that the earlier rate hikes are working through the economy. 

In his speech, he explained that the cumulative rate hike of 250 bps from FY23 is working its way through the economy. The Monetary Policy Committee remains committed to aligning inflation with the 4% goal and anchoring any inflation expectations. 

He also explained that the global economy continues to face daunting challenges to this day. 

10:10 AM:

Global economics are resilient

RBI Governor further went on to say a number of economies have demonstrated remarkable resilience and the grim prospect of a hard landing is easing. However, globally, the policy rate could stay higher for longer. 

10:12 AM:

Economic Activity in India

The RBI Governor Shaktikanta Das was delighted to speak about India’s overall economic growth. “The momentum of overall economic activity in India has continued to be positive,” he said, adding that “a high frequency of data suggests the beginning of a recovery in rural demand as well.”

10:15 AM:

The RBI Governor moved to the topic of GDP and CPI inflation

The RBI Governor went on to speak about the GDP growth and CPI inflation in the country. The GDP growth forecast for 2023-24 has been retained at 6.5 per cent. He further went on to say that there is a substantial increase in headline CPI inflation in the near future. The CPI inflation for 2023-24 was raised to 5.4 per cent from the previous 5.1 per cent. 

10:22 AM:

An increment Cash Reserve Ratio of 10% for Banks has been introduced temporarily. 

RBI Governor Shaktikanta Das presented a temporary measure for banks. In his presentation, he said, ” Starting fortnight August 12, banks will have to maintain an incremental Cash reserve ratio (CRR) of 10% on the increase in their NDTL between May 19 and July 28th, 2023.”

He further went on to say that the existing CRR remains unchanged and additionally, the incremental CRR of 10% for banks is intended to absorb the surplus liquidity generated and as per RBI this is purely a temporary measure to manage the liquidity overhang. 

These measures will further be reviewed on September 8th or even earlier to analyze their efficiency. 

10:35 AM:

A framework to base EMI interest rates on floating rates is being proposed

The governor of the RBI has since proposed a transparent framework for resetting the interest rate on EMI payments based on floating rates. The framework shall require clear communication, and options to switch to fixed-rate or foreclosure of loan among other things. These measures are being laid down for strengthening consumer protection in the country. 

10:37 AM:

New Financial tech inclusion and Offline payment in UPI:

The most exciting announcement of the meeting could be this news. 

The RBI governor proposed to enable conversational payment in UPI by introducing offline payments for INR 200 – 500 in UP using a near-field tech via UPI lite. Furthermore they have considered implementing conversational payments on unified payments interface (UPI) through artificial intelligence (AI).

Furthermore, the Reserve Bank Innovation Hub has been working on a public tech platform for pushing its frictionless credit delivery systems. It is hinted that it will have an open architecture and API to which all financial sector players can connect seamlessly. The RBI’s goal through this is to accelerate the penetration of credit and deepen financial inclusion in the Indian financial sector. 

That’s all about the big announcements in the RBI Monetary Policy Committee Meet 2023. 

What’s in store for the financial sector in India after all these revelations? 

We’ll have to wait and see for the exciting developments.

Until then, Happy Trading!!

Commodity Samachar

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