Key Takeaways from RBI MPC Meeting: Repo rate, Inflation, GDP forecasts, UPI Lite e-mandate, and more

Key Takeaways from RBI MPC Meeting: After the 2024 Lok Sabha Elections 2024 verdict, all eyes were on the repo rate. However, RBI governor Shaktikanta Das-led monetary policy committee (MPC) on Friday (June 7, 2024) decided by a majority of 4:2 to keep policy rates unchanged. In his address after the MPC meeting, Das said that the RBI will take steps to enhance India's global footprint. "India economy exhibits strong fundamentals, financial stability," he said. While he raised the GDP forecast, he kept consumer inflation forecast unchanged. The RBI governor also said that the interest rate on small loan amount is high, and banks and NBFCs should work in the interest of customers. He also said that the difference in credit deposit is also high. Das informed that the UPI Lite will be brought under e-mandate framework.

Here's are the key takeaways from his MPC meeting today.

Repo Rate

For the eighth consecutive time, the central bank has kept the repor unchanged at 6.50 per cent. 

Along with that, the central bank has also maintained its stance of withdrawal of accomodation. 

GDP forecast

The RBI has decided to raise GDP forecast for FY25 to 7.2 per cent from its earlier forecast of 7 per cent. 

Das says that private consumption is recovering on back of urban discretionary spending. He says he expects rural consumption to get a boost from strengthening agri activity as monsoon progresses. 

GDP forecast quarter-wise

The RBI has also revised raise GDP forecasts for all four quarters.

For Q1FY25, it has raised the GDP forecast to 7.20 per cent from 7 per cent.   

For Q2FY25, the central bank has raised the GDP forecast to 7.30 per cent from 7.10 per cent.   

For Q2FY25, the RBI has raised the GDP forecast to 7.30 per cent from 7.0 per cent.   

For Q2FY25, it has raised the GDP forecast to 7.20 per cent from 7.0 per cent.   

Inflation forecast 

The central bank has maintained FY25 consumer inflation forecast at 4.5 per cent. Das said, "Q2 FY25 likely to see some softness in inflation, but spillover risks remain in H2."

Core inflation was at 3.2 per cent (year-on-year) in April 2024, the lowest in the current CPI series.

Food inflation, on the other hand, was at 7.9 per cent in April 2024 and averaged 7.0 per cent in FY 2023-24.

GNPA

The RBI governor said that GNPA of NBFCs and scheduled commercial banks is below 3 per cent as of March 24. 

He said that that the RBI was closely monitoring data to ascertain if further measures were necessary on unsecured lending.

Contingent reserve buffer 

The RBI governor said that the central bank's contingent reserve buffer increase to 6.5 per cent will strengthen its balance sheet’. 

He also highlighted the bumper Rs 2.1 lakh crore dividend given to the central government and an increase in risk buffers.  

Inclusion of recurring payments with auto-replenishment facility under the e-mandate framework

The RBI proposed to include payments, such as replenishment of balances in Fastag, National Common Mobility Card (NCMC), etc. which are recurring in nature but without any fixed periodicity, in the e-mandate framework. 

This will enable customers to automatically replenish the balances in Fastag, NCMC, etc., if the balance goes below the threshold limit set by them. 

This will enhance convenience in making travel / mobility related payments, the RBI governor says. 

Auto-replenishment of UPI Lite Wallet

To encourage wider adoption of UPI Lite, the RBI has proposed to bring it under the e-mandate framework by introducing a facility for customers to automatically replenish their UPI Lite wallets if the balance goes below the threshold limit set by them. 

This will further enhance the ease of making small value digital payments, says Das.