RBI keeps repo rate unchanged at 6%

Sean Reid
April 6, 2018

All 61 respondents had predicted the rate would be kept on hold at its lowest level since November 2010.

CPI inflation forecast for the second half of FY19 is cut to 4.4 percent from 4.5 - 4.6 percent.

ICICI Bank managing director and chief executive Chanda Kochhar said, "the significant positive in the monetary policy was the downward revision of inflation projections".

The RBI expects GDP growth to strengthen from 6.6 per cent in FY18 to 7.4 per cent in FY19.

Currently, banks do not charge any commitment fee and do not maintain capital on the undrawn portion of the CC because it is classified as an unconditionally cancellable facility, which does not have any risk weight under the Basel rules.

According to the MPC statement, the recent volatility in global crude prices has brought considerable uncertainty to the near-term inflation outlook. "They constitute liability of the central bank, and they will be in circulation in addition to the paper currency that we have", deputy governor B P Kanungo told reporters during the customary post-policy address.

Real estate developers and consultants today said the RBIs decision to keep key policy rates unchanged was on expected lines but the sector was looking for some encouragement to boost funding and demand in the sluggish housing segment. Based on this projection, the Monetary Policy Committee noted that the output gap is closing but the long-term growth potential is likely to be strengthened by structural reforms.

Following the decision, the repo rate, at which the central bank lends short-term money to other banks, will continue to stay at 6 percent.

Scheduled Commercial Banks (SCBs), excluding regional rural banks (RRBs), were required to implement Ind AS from April 1, 2018.

Separately, the RBI said it has set up an inter-departmental group to study the "desirability and feasibility" of introducing a central bank digital currency.

He also pointed that the format of the financial statement as prescribed in schedule three of banking regulation act is not amenable to reporting financial statements under Ind AS and therefore the RBI has requested the government to amend the schedule and that was under consideration. "We have had conversations with central banks who have mandates to fix certain payment problems, and one solution they look to is a Blockchain type of platform", he said.

Other reports by

Discuss This Article