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RBI keeps repo rate unchanged at 6.5 percent

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Proposes to raise UPI transaction limit at hospitals and educational institutions to Rs 5 lakh

The Reserve Bank of India (RBI) has kept the policy repo rate unchanged at 6.5 per cent in its monetary review meeting. This is for the fifth time in a row that the MPC has maintained the status quo. Briefing about the Bi-Monthly Monetary Policy in Mumbai this morning, RBI governor Shakitkanta Das said that the Monitory Policy Committee, MPC’s has unanimously decided to keep key rates unchanged.

Mr Das added that consequently, the Standing Deposit Facility rate remains at 6.25 percent and the Marginal Standing Facility (MSF) rate and the Bank Rate at 6.75 percent. Attributing the declining inflation as reason behind maintain status quo the policy stance, the RBI Governor informed that, real GDP growth projection for the current year 2023-24 has been revised from earlier 6.5 per cent to 7 percent.

Real GDP growth for Quarter one of 2024-25 is projected at 6.7 per cent, for Quarter 2 at 6.5 per cent and for Quarter 3 at 6.4 per cent. He added that the risks are evenly balanced.

The RBI Governor also said that the central bank has proposed to hike the limit of UPI transactions in hospitals and educational institutions from one lakh rupees to 5 lakhs.

The RBI Governor highlighted that while the global economy is showing signs of slowdown, the Indian economy presents a picture of resilience and momentum. He said that the real gross domestic product (GDP) growth for Q2 of the current financial year has exceeded all forecasts.

Mr. Shaktikanta Das further said that the fundamentals of the Indian economy remain strong with banks and corporates showing healthier balance sheets; fiscal consolidation on course; external balance remaining eminently manageable; and forex reserves providing cushion against external shocks. He added that these factors, combined with consumer and business optimism, create congenial conditions for sustained growth of the Indian economy.

The Governor also informed that the MPC has decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

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