The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India on Thursday decided by 5 to 1 majority to keep the policy rate unchanged at 6.5 per cent.

The RBI MPC also decided to maintain the monetary policy stance as ‘withdrawal of accommodation’.

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RBI Governor Shaktikanta Das announced that the Marginal Standing Facility ( MSF) and Standing Deposit Facility (SDF) rates remain unchanged at 6.75 per cent and 6.25 per cent . “Growth accelerating and outpacing most analysts’ forecasts,” he said.

Announcing the MPC decision, the Governor said the Real GDP growth was projected at 7 per cent for 2024-25. For next year, real GDP growth for Q1 2024-25 was projected at 7.2 per cent, for Q2 at 6.8 per cent, Q3 at 7 per cent and Q4 at 6.9 per cent , the risks were evenly balanced.

“Though global trade momentum remains weak, it is exhibiting signs of recovery and is likely to grow faster in 2024,” the Governor said.

He stated the Consumer Price Index (CPI) Inflation for the current year is projected at 5.4 per cent with Q4 at 5 per cent . For next year (2024-25), CPI inflation is projected at 4.5 per cent . CPI Inflation for Q1 2024-25 is projected at 5 per cent , Q2 at 4 per cent and Q3 at 4.6 per cent and Q4 at 4.7 per cent .

“In this uncertain global environment, the Indian economy has performed remarkably well, inflation on a downward trajectory,” the Governor said.

Das announced a few additional measures while announcing the MPC decision.

Announcing the review of the regulatory framework for electronic trading platforms, he said, “A revised regulatory framework for electronic trading platforms will be issued for stakeholders feedback.”

On hedging of gold price risk in the Over the counter (OTC) in Indian Financial System Code (IFSC), he said,”It is now decided to also allow resident entities to hedge the price of gold in the OTC segment in the IFSC.”

He further announced to enhance transparency in disclosure of various charges and fees among others.

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. This will lead to enhanced transparency in lending and will enable customers to make informed decisions. Circular will be issued separately,” he announced.

The RBI MPC also proposed to streamline the process for onboarding of AePS service providers and introduce some additional fraud risk management measures.

A principle-based framework for authentication of digital payment transactions is also announced to facilitate adoption of alternative authentication mechanisms for enhancing security of digital payments, proposed to put in place a principle-based framework for authentication of such transactions.

The MPC also announced the introduction of programmability and offline functionality in Central Bank Digital Currency (CBDC) pilot projects. “Its now proposed to enable additional functionalities of programmability and offline capability in CBDC retail payments,” the Governor said.

The MPC started its three-day meeting on February 6, and concluded with the RBI Governor’s address.

Notably, this was the first RBI MPC announcement of 2024. In the last five RBI MPC meetings, the repo rate has been kept unchanged at 6.5 per cent.