fbpx

RBI MPC Meeting – A Guide Through Today’s Announcements [Financial Roundup 2023]


RBI MPC Meeting - A Guide Through Today's Announcements [Financial Roundup 2023]

The RBI MPC meeting concluded and the RBI governor made several exciting announcements which made for knowledge about the financial market. 

Before the meeting went live, several external challenges needed to be considered. The upcoming external environment is expected to pose ongoing challenges, as global growth is projected to decelerate in 2024. While the United States might manage to steer clear of a technical recession, there are significant doubts regarding China’s recovery, while economic prospects in the European Union region continue to appear fragile.

With the UNCTAD raising India’s growth estimate it has revised the economic growth projection for India in 2023, increasing it from the previously forecasted 6% to 6.6%. With all this positive news incoming, let’s dive into the announcements at the RBI MPC Meeting 2023. 

RBI MPC Meeting 2023|Noteworthy quotes by the RBI Governor:

RBI maintains the status quo and keeps the rate unchanged at 6.5% and the SDF rate unchanged at 6.25%.

This is in line with the street expectations. For the fourth time in a row, the RBI has not changed anything. 

Meanwhile, the inflation rate eased from its 15-month high of 7.44% in July to 6.83% in August this year.  

The PM Vishwakarma Scheme recipients will now be covered by the Payments Infrastructure Development Fund (PIDF) Scheme, which will also be extended by two years.

“Furthermore, the fund would now be expanded to enable the deployment of emerging payment acceptance technologies, such as soundbox and Aadhaar-enabled biometric payment acceptance devices,” the statement continued.

Economy & Inflation data:

Manufacturing operations in India experienced a decline marking a 5-month low, primarily due to a slower increase in new orders, consequently subduing production growth. Also, he further said that the service sector in India witnessed its highest growth rate in 13 years, primarily driven by a substantial surge in new business opportunities due to robust demand conditions. 

RBI has maintained its inflation outlook at 5.4% 

  • Q2 – 6.4%
  • Q3 – 5.6%
  • Q4 – 5.2%
  • FY25 – 52%

RBI gov further states that core inflation has softened to 4.9% eased by 140 bps.

RBI MP Meeting Discusses the Banking System:

The RBI Gov stated that the I-CRR is being discontinued in a phased manner by October 7th, 2023. He further went on to say ” India’s forex at $586.9 bn as of September 29th, 2023″

He continued, “Banks with excess funds should think about lending to the interbank call market.”

The RBI expects ease in liquidity conditions on the back of the release of the remaining impounded I-CRR funds and pickup in government spending. Whereas an increase in currency demand due to festival season may act as a counterbalancing factor. 

Concerning urban cooperative banks, the RBI said ” The limit for gold loans increased from INR 2 lakhs to INR 4laksh concerning urban cooperative banks”

Internal Ombudsman Scheme:

The Internal Ombudsman Scheme is to be further fine-tuned to safeguard the interest of customers said Governor Das.

Internal ombudsman framework for select scheduled commercial banks, about bank issues and credit information, will be finely tuned. These guidelines will have similar design features to the previous scheme but vary in certain aspects.

External sector developments: 

It has remained in a contraction phase. Services exports grew at a healthy pace at the start of this year, driven by software and business services. 

On the remittances front, the rise of 5.8% YoY in Q1 FY24 was registered, whereas the current account deficit declined to 1.1% of GDP. The foreign exchange reserves grew by a net $24.4 bn. With $4.5 billion received under external commercial borrowing between April and August, a turnaround was seen.

Inward remittance of 5% y/y has increased. FDI flows have seen a significant turnaround in 2023 – 2024 of 20.3 billion up to September. 

Net foreign direct investment moderated by 5.8 billion from 17 billion a year ago. 

Commodity Samachar’s Outlook on the Future Market:

Our head of research at Commodity Samachar, Ankit Kapoor had this to say about the announcements by the RBI MPC meeting . 

“Interest rates have not been changed by the RBI. It does not matter that it has not been changed but the matter to focus on should be when interest rates have been decreased. Everything is stagnant for now, but the decision’s impact will be witnessed during the festive session like Diwali where upside movements could be potentially seen in the equities market. 

Geopolitical issues are a concern at the moment, however, there is a relief for the government as crude oil falls. Hopefully, the market will move upside for equities.”

Commodity Samachar
Learn and Trade with Ease



Also Read: Stock Market India | Sideways Moves and Price Rejections. What lies ahead for Indian Indices?

Recommended Read: Canada-India Relations: Escalating Tensions and Geopolitical Frictions