Despite global rate reductions, the RBI maintained its policy rate at 6.5 per cent, citing concerns over food inflation and strong GDP growth. Watch for more details!

RBI Keeps Borrowing Rates Steady at 6.5%, Flags High Inflation

The Reserve Bank of India (RBI) has announced its decision to keep the benchmark repo rate steady at 6.5 per cent for the tenth consecutive time, a move that underlines the country's economic resilience despite shifting global trends. This decision comes in stark contrast to the US Federal Reserve's recent interest rate cuts aimed at stimulating a slowing economy.

India's steadfast approach reflects a commitment to maintaining economic stability in the face of persistent food inflation, which significantly impacts household budgets. With food prices contributing approximately 70 per cent to overall retail inflation, the RBI's focus on controlling these pressures is evident. The bank has reiterated its dedication to monitoring inflation closely, particularly as it continues to present challenges for policymakers.

On RBI maintaining repo rate to 6.5 per cent, Bankbazaar Co-founder Adhil Shetty&nbsp;stated that “The RBI has kept the repo rate unchanged at 6.5 per cent, which is good news for inflation control. The repo rate has now remained unchanged at 6.5 per cent for nine consecutive Monetary Policy Committee (MPC) meetings, after a cumulative hike of 250 basis points since May 2022. The RBI has shifted its stance to neutral. This means it is ready to act either way, depending on how things unfold. If inflation stays low, we may see rate cuts in the future. But for now, it's a wait-and-watch situation. Loan holders may need to wait longer for rate cuts, possibly until December. If inflation stays under control, a rate cut could come. Until then, EMIs will remain at current levels.”<o:p></o:p>

Shetty further elaborated that, “Globally, things are looking resilient. Despite challenges like high oil prices and supply chain disruptions, economies are managing well. India's outlook is steady compared to other nations, thanks to strong fundamentals. The policy easing will help start-ups and pre-IPO companies.”<o:p></o:p>

“India’s GDP grew by 6.7 per cent, which is promising. Private consumption and investment have picked up, showing that people and businesses are spending again. Government spending, however, has decreased, putting more pressure on the private sector to drive growth.”

India’s economic fundamentals remain robust<o:p></o:p>

The decision to hold rates steady, signals confidence in India's economic fundamentals, which remain robust despite global uncertainties. While the US has adopted a more accommodative monetary policy, India's choice to maintain higher interest rates positions it as an attractive destination for global investors seeking better returns. This could lead to a strengthening of the Indian rupee as capital flows into the economy increase.

India's economic outlook appears promising, with a reported GDP growth rate of 6.7 per cent. This growth is bolstered by increased private consumption and investment, indicating that both consumers and businesses are regaining confidence and spending once again. However, a decline in government spending has placed greater responsibility on the private sector to sustain this momentum.

While the RBI’s decision is seen as positive news for inflation control, it also suggests that loan holders may have to wait longer for potential rate cuts, possibly until December. The RBI has shifted its stance to neutral, indicating a readiness to adjust rates based on future economic developments. If inflation remains under control, there may be room for future cuts; however, for now, borrowers will need to adapt to current levels of equated monthly installments (EMIs).

Hence, by maintaining the repo rate at 6.5 per cent, the RBI not only aims to control inflation but also reinforces India's position as a resilient player in the global economy. As the situation evolves, stakeholders will be keenly observing future decisions of the Reserve Bank of India.

The Reserve Bank of India (RBI) has announced its decision to keep the benchmark repo rate steady at 6.5 per cent for the tenth consecutive time, a move that underlines the country's economic resilience despite shifting global trends.

The Reserve Bank of India (RBI) has announced its decision to keep the benchmark repo rate steady at 6.5 per cent for the tenth consecutive time, a move that underlines the country's economic resilience despite shifting global trends. This decision comes in stark contrast to the US Federal Reserve's recent interest rate cuts aimed at stimulating a slowing economy. India's steadfast approach reflects a commitment to maintaining economic stability in the face of persistent food inflation, which significantly impacts household budgets. With food prices contributing approximately 70 per cent to overall retail inflation, the RBI's focus on controlling these pressures is evident. The bank has reiterated its dedication to monitoring inflation closely, particularly as it continues to present challenges for policymakers. On RBI maintaining repo rate to 6.5 per cent, Bankbazaar Co-founder Adhil Shetty stated that “The RBI has kept the repo rate unchanged at 6.5 per cent, which is good news for inflation control. The repo rate has now remained unchanged at 6.5 per cent for nine consecutive Monetary Policy Committee (MPC) meetings, after a cumulative hike of 250 basis points since May 2022. The RBI has shifted its stance to neutral. This means it is ready to act either way, depending on how things unfold. If inflation stays low, we may see rate cuts in the future. But for now, it's a wait-and-watch situation. Loan holders may need to wait longer for rate cuts, possibly until December. If inflation stays under control, a rate cut could come. Until then, EMIs will remain at current levels.” Shetty further elaborated that, “Globally, things are looking resilient. Despite challenges like high oil prices and supply chain disruptions, economies are managing well. India's outlook is steady compared to other nations, thanks to strong fundamentals. The policy easing will help start-ups and pre-IPO companies.” “India’s GDP grew by 6.7 per cent, which is promising. Private consumption and investment have picked up, showing that people and businesses are spending again. Government spending, however, has decreased, putting more pressure on the private sector to drive growth.” India’s economic fundamentals remain robust The decision to hold rates steady, signals confidence in India's economic fundamentals, which remain robust despite global uncertainties. While the US has adopted a more accommodative monetary policy, India's choice to maintain higher interest rates positions it as an attractive destination for global investors seeking better returns. This could lead to a strengthening of the Indian rupee as capital flows into the economy increase. India's economic outlook appears promising, with a reported GDP growth rate of 6.7 per cent. This growth is bolstered by increased private consumption and investment, indicating that both consumers and businesses are regaining confidence and spending once again. However, a decline in government spending has placed greater responsibility on the private sector to sustain this momentum. While the RBI’s decision is seen as positive news for inflation control, it also suggests that loan holders may have to wait longer for potential rate cuts, possibly until December. The RBI has shifted its stance to neutral, indicating a readiness to adjust rates based on future economic developments. If inflation remains under control, there may be room for future cuts; however, for now, borrowers will need to adapt to current levels of equated monthly installments (EMIs). Hence, by maintaining the repo rate at 6.5 per cent, the RBI not only aims to control inflation but also reinforces India's position as a resilient player in the global economy. As the situation evolves, stakeholders will be keenly observing future decisions of the Reserve Bank of India.

RBI holds rates steady at 6.5%, signalling economic resilience amid global trends

India's government approved the re-appointment of Reserve Bank of India deputy governor M. Rajeshwar Rao for a period of one year starting Oct. 9 or until further orders, it said late on Friday.

Rao was first appointed deputy governor in September 2020 for a period of three years and was given a one year extension in 2023. With the latest re-appointment, Rao would serve a total of five years in the position.

Rao is currently in charge of the RBI's departments of regulation, risk monitoring, communication, enforcement and legal.

Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION&nbsp;audience. 
&nbsp;

India's government approved the re-appointment of Reserve Bank of India deputy governor M. Rajeshwar Rao for a period of one year starting Oct. 9 or until further orders, it said late on Friday.

India's government approved the re-appointment of Reserve Bank of India deputy governor M. Rajeshwar Rao for a period of one year starting Oct. 9 or until further orders, it said late on Friday. Rao was first appointed deputy governor in September 2020 for a period of three years and was given a one year extension in 2023. With the latest re-appointment, Rao would serve a total of five years in the position. Rao is currently in charge of the RBI's departments of regulation, risk monitoring, communication, enforcement and legal. Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

Indian govt extends RBI deputy governor M. Rajeshwar Rao's tenure by one year

Seen as an important declaration, the Chief of the Reserve Bank of India (RBI), Shaktikanta Das, discussed his positive outlook for India's economic trajectory in a recent conversation with CNBC. According to Das, India can potentially achieve sustainable growth of up to 8 per cent in the coming years. This optimistic prediction comes amid a backdrop of robust economic recovery following the challenges posed by the pandemic.

Factors responsible for growth<o:p></o:p>

Das highlighted that several key factors contribute to this potential growth, including strong domestic demand, increased foreign investment, and comprehensive government reforms. He noted, "The Indian economy is on a strong footing, boosted by a resurgence in consumer confidence and an uptick in manufacturing activities. These elements are crucial for driving sustainable development in the long run."

Furthermore, he emphasised the importance of continuous monetary policy support to sustain this upward momentum. "The RBI will remain vigilant in ensuring that inflation is kept in check while facilitating growth," he added.

In a reaction to the governor’s 8 per cent prediction on growth, Eswar Prasad, professor of international trade and economics at Cornell University, told CNBC that the figure seemed like more of an “aspiration” than a “realistic” goal at this stage.

It is also to be noted that, in an August bulletin by the Reserve Bank of India, the governor highlighted an expected 7.2 per cent real GDP rate (adjusted for inflation) for 2024 to 2025, with the same figure for the first quarter of 2025 to 2026 fiscal year, with risks either side being “evenly balanced.”

Governor on the Fed rate cuts <o:p></o:p>

On the question of the Federal Reserve rate cut Das stated that, “We will not be influenced by how much of a rate cut they are doing, whether it is 25 or 50 or how often and what is the frequency of their rate cuts.”

Additionally, the Reserve Bank of India Chief pointed out that the government's focus on infrastructure development and digital transformation is paving the way for enhanced economic activities. "Significant investments in infrastructure will not only create jobs but also stimulate further economic engagement across various sectors," he explained.

The future trajectory of the Indian economy<o:p></o:p>

Hence, the RBI Chief's insights work as a ray of hope for stakeholders in the Indian economy, offering a clear vision of the potential for sustainable growth. As the nation gears up for the future, the emphasis remains on strategic measures to make the most of this growth potential effectively. 

Further, India has recently been described by the International Monetary Fund as “the world’s fastest-growing major economy,” whereas, Goldman Sachs believes that India is poised to become the world’s second-largest economy by 2075, overtaking Japan, Germany, and the US to become second only to China thus underlining the growth potential and the trajectory for the world's fastest-growing major economy.&nbsp;

With these developments, India stands at a crucial moment where targeted government policies, improvements in education, and healthcare, and well-planned capital expenditure in critical sectors could significantly bolster its economic landscape, making it an attractive destination for both domestic and international investors.

Seen as an important declaration, the Chief of the Reserve Bank of India (RBI), Shaktikanta Das, discussed his positive outlook for India's economic trajectory in a recent conversation with CNBC.

Seen as an important declaration, the Chief of the Reserve Bank of India (RBI), Shaktikanta Das, discussed his positive outlook for India's economic trajectory in a recent conversation with CNBC. According to Das, India can potentially achieve sustainable growth of up to 8 per cent in the coming years. This optimistic prediction comes amid a backdrop of robust economic recovery following the challenges posed by the pandemic. Factors responsible for growth Das highlighted that several key factors contribute to this potential growth, including strong domestic demand, increased foreign investment, and comprehensive government reforms. He noted, "The Indian economy is on a strong footing, boosted by a resurgence in consumer confidence and an uptick in manufacturing activities. These elements are crucial for driving sustainable development in the long run." Furthermore, he emphasised the importance of continuous monetary policy support to sustain this upward momentum. "The RBI will remain vigilant in ensuring that inflation is kept in check while facilitating growth," he added. In a reaction to the governor’s 8 per cent prediction on growth, Eswar Prasad, professor of international trade and economics at Cornell University, told CNBC that the figure seemed like more of an “aspiration” than a “realistic” goal at this stage. It is also to be noted that, in an August bulletin by the Reserve Bank of India, the governor highlighted an expected 7.2 per cent real GDP rate (adjusted for inflation) for 2024 to 2025, with the same figure for the first quarter of 2025 to 2026 fiscal year, with risks either side being “evenly balanced.” Governor on the Fed rate cuts On the question of the Federal Reserve rate cut Das stated that, “We will not be influenced by how much of a rate cut they are doing, whether it is 25 or 50 or how often and what is the frequency of their rate cuts.” Additionally, the Reserve Bank of India Chief pointed out that the government's focus on infrastructure development and digital transformation is paving the way for enhanced economic activities. "Significant investments in infrastructure will not only create jobs but also stimulate further economic engagement across various sectors," he explained. The future trajectory of the Indian economy Hence, the RBI Chief's insights work as a ray of hope for stakeholders in the Indian economy, offering a clear vision of the potential for sustainable growth. As the nation gears up for the future, the emphasis remains on strategic measures to make the most of this growth potential effectively. Further, India has recently been described by the International Monetary Fund as “the world’s fastest-growing major economy,” whereas, Goldman Sachs believes that India is poised to become the world’s second-largest economy by 2075, overtaking Japan, Germany, and the US to become second only to China thus underlining the growth potential and the trajectory for the world's fastest-growing major economy. With these developments, India stands at a crucial moment where targeted government policies, improvements in education, and healthcare, and well-planned capital expenditure in critical sectors could significantly bolster its economic landscape, making it an attractive destination for both domestic and international investors.

India can achieve sustainable growth of up to 8%: RBI Chief Shaktikanta Das

In a crackdown on digital lending apps, the Reserve Bank of India, in its recent monetary policy committee meeting,&nbsp;announced the creation of a Digital India Trust Agency (DIGITA). It will function as a central repository of legitimate digital lending apps and is the latest move&nbsp;in the battle against&nbsp;unauthorised digital lending fraud.

This comes as the Indian lending market experiences exponential growth, aided by increasing internet and smartphone penetration. This has subsequently led to a glaring number of online fraud cases in the country, currently at 29,082 in the financial year 2023-24 (334 per cent&nbsp;year-on-year increase). Fraud cases in the banking sector alone have risen 166 per cent&nbsp;year-on-year.

To discuss the menace of online lending fraud in India’s digital economy and the needed regulations, we spoke to Siddharth Soni, a fintech expert based out of Mumbai.

“India is fortunate to have one of the most proactive regulators globally. RBI has driven many proactive interventions in light of this emerging threat,” he said&nbsp;while pointing to the digital lending guidelines published in 2022 and several other reforms, including enforcing rules on Google to allow only legal lending apps on their Play Store,&nbsp;guidelines for fintech self regulatory organisation (SRO), and&nbsp;Integrated Ombudsman Scheme launched in 2021. The Ombudsman&nbsp;scheme simplified the grievances redressal process by consolidating various distinct ombudsman schemes into one umbrella for all its entities (NBFCs, Banks, CICs, PPI issuers) - with one portal, one email and one address for the customers to lodge their complaints.

This begs the question: Why are unauthorised lending apps prevalent despite these regulations?&nbsp;

“I believe the real challenge lies in growing customer awareness,” Siddharth said. “A report by industry body FACE (Fintech Association for Consumer Empowerment) suggests that almost 36 per cent of survey respondents who initially displayed “high-confidence in their ability to verify Digital Lending App legality” actually had limited awareness on how to go about verifying - rather using factors such as app review and rating,” he added.

Creating customer trust in digital lending&nbsp;is more difficult than in&nbsp;traditional lending. This is more psychological as&nbsp;digital lending&nbsp;is&nbsp;technically through apps on our phones. With the rise in online fraud cases, this trust, which is already on a slippery slope, is expected to decline further. “Unauthorised digital lending apps not only cause economic loss to borrowers, but on a broader level create a negative impression for the overall legitimate digital lending industry,” Siddharth said.

Factors driving India's digital lending market

Siddharth&nbsp;expressed optimism in the industry’s growth outlook. “The overall fintech lending growth story remains strong. India is at the peak of its demographic dividend with an average age of 28 years. These young, digitally savvy Indians are the target market for fintechs. As they grow older, their income levels and requirement for financial services will grow in tandem - and fintechs will be well placed to serve them digitally,” he said.

“India’s fintech adoption rate as per the global fintech adoption index is 87 per cent higher than the global average of 64 per cent. Fintech adoption beyond tier 1-2 is rising rapidly on the back of growing wireless internet penetration, better access to cheap smartphones, and rising income levels. These are few among several tailwinds which will drive growth for the fintech lending industry overall," he said on the factors driving India’s fintech growth.

India is positioned to dominate the digital lending market but needs to address the challenges of financial literacy and digital fraud more diligently. This becomes more crucial as tech becomes sophisticated with the rise of Artificial intelligence.

Can AI armour digital lending market against fraud? "The silver lining is, we may potentially see growth in sophisticated AI-led fraud detection and prevention tools to evolve in parallel. As we observed platforms such as GPTZero get launched to combat AI plagiarism, similar tools to prevent AI led frauds in KYC may be seen in the future," Siddharth said.

(Expert views are personal)

In a crackdown on digital lending apps, the Reserve Bank of India, in its recent monetary policy committee meeting, announced the creation of a Digital India Trust Agency (DIGITA).

In a crackdown on digital lending apps, the Reserve Bank of India, in its recent monetary policy committee meeting, announced the creation of a Digital India Trust Agency (DIGITA). It will function as a central repository of legitimate digital lending apps and is the latest move in the battle against unauthorised digital lending fraud. This comes as the Indian lending market experiences exponential growth, aided by increasing internet and smartphone penetration. This has subsequently led to a glaring number of online fraud cases in the country, currently at 29,082 in the financial year 2023-24 (334 per cent year-on-year increase). Fraud cases in the banking sector alone have risen 166 per cent year-on-year. To discuss the menace of online lending fraud in India’s digital economy and the needed regulations, we spoke to Siddharth Soni, a fintech expert based out of Mumbai. “India is fortunate to have one of the most proactive regulators globally. RBI has driven many proactive interventions in light of this emerging threat,” he said while pointing to the digital lending guidelines published in 2022 and several other reforms, including enforcing rules on Google to allow only legal lending apps on their Play Store, guidelines for fintech self regulatory organisation (SRO), and Integrated Ombudsman Scheme launched in 2021. The Ombudsman scheme simplified the grievances redressal process by consolidating various distinct ombudsman schemes into one umbrella for all its entities (NBFCs, Banks, CICs, PPI issuers) - with one portal, one email and one address for the customers to lodge their complaints. This begs the question: Why are unauthorised lending apps prevalent despite these regulations? “I believe the real challenge lies in growing customer awareness,” Siddharth said. “A report by industry body FACE (Fintech Association for Consumer Empowerment) suggests that almost 36 per cent of survey respondents who initially displayed “high-confidence in their ability to verify Digital Lending App legality” actually had limited awareness on how to go about verifying - rather using factors such as app review and rating,” he added. Creating customer trust in digital lending is more difficult than in traditional lending. This is more psychological as digital lending is technically through apps on our phones. With the rise in online fraud cases, this trust, which is already on a slippery slope, is expected to decline further. “Unauthorised digital lending apps not only cause economic loss to borrowers, but on a broader level create a negative impression for the overall legitimate digital lending industry,” Siddharth said. Factors driving India's digital lending market Siddharth expressed optimism in the industry’s growth outlook. “The overall fintech lending growth story remains strong. India is at the peak of its demographic dividend with an average age of 28 years. These young, digitally savvy Indians are the target market for fintechs. As they grow older, their income levels and requirement for financial services will grow in tandem - and fintechs will be well placed to serve them digitally,” he said. “India’s fintech adoption rate as per the global fintech adoption index is 87 per cent higher than the global average of 64 per cent. Fintech adoption beyond tier 1-2 is rising rapidly on the back of growing wireless internet penetration, better access to cheap smartphones, and rising income levels. These are few among several tailwinds which will drive growth for the fintech lending industry overall," he said on the factors driving India’s fintech growth. India is positioned to dominate the digital lending market but needs to address the challenges of financial literacy and digital fraud more diligently. This becomes more crucial as tech becomes sophisticated with the rise of Artificial intelligence. Can AI armour digital lending market against fraud? "The silver lining is, we may potentially see growth in sophisticated AI-led fraud detection and prevention tools to evolve in parallel. As we observed platforms such as GPTZero get launched to combat AI plagiarism, similar tools to prevent AI led frauds in KYC may be seen in the future," Siddharth said. (Expert views are personal)

India’s digital lending landscape: Is the RBI doing enough to curb online fraud?

The Reserve Bank of India released its <a href="https://rbi.org.in/Scripts/AnnualPublications.aspx?head=Report%20on%20Currency%20and%20Finance">report on currency and finance</a> for the year 2023-24. The theme of the report is 'India's digital revolution'.

Key highlights

The report notes that India is at the forefront of the digital revolution, with a vibrant fintech ecosystem and a conducive policy environment. Digital technologies are 'unlocking' opportunities in financial inclusion and use in cross-border trade and remittances. The digital economy currently accounts for 10 per cent of the country's GDP and is expected to double to 20 per cent by 2026.

The report adds that the increased regulatory framework has boosted consumer confidence in digital fintech products. Coming to the challenges, data privacy, third-party risks, and fraud claims continue to scar an otherwise booming industry. The average cost of a data breach jumped 28 per cent in the last three years. The automotive industry is the most vulnerable to such digital attacks. &nbsp;

Borrowing trends

Under consumers availing personal loan options digitally, the percentage of young borrowers has risen considerably, with 65 per cent of the total personal loans given to borrowers aged less than 35. Meanwhile, the Average ticket size of personal loans disbursed by fintech has slumped over the last two years.

The report further notes that the adoption of digital technologies has boosted the efficiency of banks and reduced risks. 'Based on a study by Patnam and Yao(2020), 400 million mobile money users in India found that mobile money use increased the resilience of households to shocks by dampening the impact of rainfall shocks on economic activity and household consumption. The study also indicated that firms adopting mobile payments improved their sales after six-months of use, had lower subjective uncertainty and greater sales optimism,' the report added.

Flagging poor internet penetration

India's internet penetration stands at 55.3 per cent, which is below the global average of 67.1 per cent.

'Moreover, there is geographical and regional divide in the availability: internet subscriptions per 100 population in urban areas were more than two times higher compared to rural India with an all-India average of 68.2. Among the rural households, only 9.9 per cent have access to a computer, while the proportion is 32.4 per cent among the urban households,' said the RBI's report.

The Reserve Bank of India released its report on currency and finance for the year 2023-24. The theme of the report is 'India's digital revolution'. Key highlights The report notes that India is at the forefront of the digital revolution, with a vibrant fintech ecosystem and a conducive policy environment.

The Reserve Bank of India released its report on currency and finance for the year 2023-24. The theme of the report is 'India's digital revolution'. Key highlights The report notes that India is at the forefront of the digital revolution, with a vibrant fintech ecosystem and a conducive policy environment. Digital technologies are 'unlocking' opportunities in financial inclusion and use in cross-border trade and remittances. The digital economy currently accounts for 10 per cent of the country's GDP and is expected to double to 20 per cent by 2026. The report adds that the increased regulatory framework has boosted consumer confidence in digital fintech products. Coming to the challenges, data privacy, third-party risks, and fraud claims continue to scar an otherwise booming industry. The average cost of a data breach jumped 28 per cent in the last three years. The automotive industry is the most vulnerable to such digital attacks. Borrowing trends Under consumers availing personal loan options digitally, the percentage of young borrowers has risen considerably, with 65 per cent of the total personal loans given to borrowers aged less than 35. Meanwhile, the Average ticket size of personal loans disbursed by fintech has slumped over the last two years. The report further notes that the adoption of digital technologies has boosted the efficiency of banks and reduced risks. 'Based on a study by Patnam and Yao(2020), 400 million mobile money users in India found that mobile money use increased the resilience of households to shocks by dampening the impact of rainfall shocks on economic activity and household consumption. The study also indicated that firms adopting mobile payments improved their sales after six-months of use, had lower subjective uncertainty and greater sales optimism,' the report added. Flagging poor internet penetration India's internet penetration stands at 55.3 per cent, which is below the global average of 67.1 per cent. 'Moreover, there is geographical and regional divide in the availability: internet subscriptions per 100 population in urban areas were more than two times higher compared to rural India with an all-India average of 68.2. Among the rural households, only 9.9 per cent have access to a computer, while the proportion is 32.4 per cent among the urban households,' said the RBI's report.

RBI's Report on Currency and Finance 2023-24: Key highlights and borrowing trends

India's robust economic strides continue to impress on the global stage as its foreign exchange reserves soar to unprecedented heights, reaching a remarkable milestone of USD 655.817 billion. This achievement, reported by the Reserve Bank of India, reflects india's steadfast commitment to securing its financial stability amidst a dynamic global landscape.

India's Forex reserves surge

India's digital payment revolution is poised for a global expansion. The Reserve Bank of India has ambitious plans to extend the reach of the unified payments interface to 20 countries by the fiscal year 2029.

RBI plans global expansion of UPI to 20 countries by 2029

Raghuram Rajan, former Reserve Bank of India (RBI) Governor, said that his family does not want him to enter politics. 
 
In a recent interview with The Print, Rajan said, “I have said repeatedly and people still don’t believe me. I am an academic, my business is not kissing babies. I have a family and a wife, who doesn’t want me to enter politics for a good reason. So, rather than enter politics, what I would like to do is help guide where I can.”

On speculation of whether he would join the Congress, he said, “And that’s what I try and do. So, where I feel government policies are going off track - I talk about it.”

When asked about his closeness with Rahul Gandhi and whether he advises the former Congress chief, Rajan said that Rahul is often depicted as someone who doesn’t have the capability to think and lead.&nbsp;

“I think that’s such a wrong portrayal in the sense that you know he’s smart, intelligent, and also brave. I think what people discount - which they should not - is this is a family which has seen the grandmother assassinated, the father blown up,” he said.

“To engage in politics, to be in the midst of crowds - if I had that experience I’d be hiding in a bed all the time. So I think there are a lot of attributes that are commendable,” he remarked.&nbsp;

He further added, “If you look at his record of what he’s been saying on events. I think he’s been right during Covid...(when he said) we need to do more preparation, we need to act early. It was the Congress calling off rallies which eventually led to stopping politicking during the second wave.”

Rahul Gandhi does not have all the answers, Raghuram Rajan said but “he is a very reasonable leader contrary to what has been portrayed. He has strong convictions, you have to debate those convictions if you disagree with them but he’s perfectly willing to engage in that debate.”

The former governor has been critical of some of the Modi government’s policies like PLI scheme and massive investment in the chip industry.

Also read:&nbsp;<a data-ved="2ahUKEwiE9Ovq3bCGAxUOzTgGHSqLCHkQxfQBKAB6BAgHEAE" href="https://www.wionews.com/business-economy/indias-aggregate-demand-grows-as-rural-spending-rebounds-rbi-724174" jsname="YKoRaf" ping="/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https://www.wionews.com/business-economy/indias-aggregate-demand-grows-as-rural-spending-rebounds-rbi-724174&amp;ved=2ahUKEwiE9Ovq3bCGAxUOzTgGHSqLCHkQxfQBKAB6BAgHEAE">India`s aggregate demand grows as rural spending rebounds: RBI</a>

Rajan joined Rahul’s Bharat Jodo Yatra in December 2022. He also had a conversation with Rahul on the sidelines of the yatra. This had stirred up a buzz and growing speculations that Raghuram Rajan joining the Congress.

Reacting to this development, BJP’s IT department head Amit Malviya said Rajan joining Rahul Gandhi’s yatra was “not a surprise”.&nbsp;

“He fancies himself as the next Manmohan Singh. Just that his commentary on India’s economy should be discarded with disdain. It is coloured and opportunistic,” added Malviya.

(With inputs from agencies)

Raghuram Rajan, former Reserve Bank of India (RBI) Governor, said that his family does not want him to enter politics. In a recent interview with The Print, Rajan said, “I have said repeatedly and people still don’t believe me.

Raghuram Rajan, former Reserve Bank of India (RBI) Governor, said that his family does not want him to enter politics. In a recent interview with The Print, Rajan said, “I have said repeatedly and people still don’t believe me. I am an academic, my business is not kissing babies. I have a family and a wife, who doesn’t want me to enter politics for a good reason. So, rather than enter politics, what I would like to do is help guide where I can.” On speculation of whether he would join the Congress, he said, “And that’s what I try and do. So, where I feel government policies are going off track - I talk about it.” When asked about his closeness with Rahul Gandhi and whether he advises the former Congress chief, Rajan said that Rahul is often depicted as someone who doesn’t have the capability to think and lead. “I think that’s such a wrong portrayal in the sense that you know he’s smart, intelligent, and also brave. I think what people discount - which they should not - is this is a family which has seen the grandmother assassinated, the father blown up,” he said. “To engage in politics, to be in the midst of crowds - if I had that experience I’d be hiding in a bed all the time. So I think there are a lot of attributes that are commendable,” he remarked. He further added, “If you look at his record of what he’s been saying on events. I think he’s been right during Covid...(when he said) we need to do more preparation, we need to act early. It was the Congress calling off rallies which eventually led to stopping politicking during the second wave.” Rahul Gandhi does not have all the answers, Raghuram Rajan said but “he is a very reasonable leader contrary to what has been portrayed. He has strong convictions, you have to debate those convictions if you disagree with them but he’s perfectly willing to engage in that debate.” The former governor has been critical of some of the Modi government’s policies like PLI scheme and massive investment in the chip industry. Also read: India`s aggregate demand grows as rural spending rebounds: RBI Rajan joined Rahul’s Bharat Jodo Yatra in December 2022. He also had a conversation with Rahul on the sidelines of the yatra. This had stirred up a buzz and growing speculations that Raghuram Rajan joining the Congress. Reacting to this development, BJP’s IT department head Amit Malviya said Rajan joining Rahul Gandhi’s yatra was “not a surprise”. “He fancies himself as the next Manmohan Singh. Just that his commentary on India’s economy should be discarded with disdain. It is coloured and opportunistic,” added Malviya. (With inputs from agencies)

Former RBI chief Raghuram Rajan to join Congress? Reacts ‘My wife doesn’t want me to’

The Reserve Bank of India is expected to make a historic move that could significantly impact the country's financial landscape. Economists predict that the RBI could pay a dividend of up to one trillion rupees or $12 billion, to the federal government.

RBI dividend to help Indian government meet deficit target

The Reserve Bank of India (RBI) has lifted restrictions on two lending products offered by Bajaj Finance. This comes after a six-month ban imposed in November 2023 due to deficiencies in adhering to digital lending guidelines.

Bajaj stock set to rebound after RBI restriction relief

The Reserve Bank of India is likely to delay cutting interest rates, until the last three months of the year. High inflation and the US FED rate policy will determine the policy trajectory of India's Central Bank.

High inflation and the US FED rate to determine policy

India’s&nbsp;central bank on&nbsp;Monday (Apr 29) imposed a monetary penalty on five co-operative banks for multiple violations.&nbsp;The Reserve Bank of India (RBI) said&nbsp;all five banks were&nbsp;found&nbsp;in non-compliance of the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on&nbsp;‘Frauds - Guidelines for Classification, Reporting and Monitoring’.&nbsp;The five banks that have been penalised are as follows:

<ul>
	<li>The Central Co-operative Bank</li>
	<li>The Vaish Co-operative Adarsh Bank&nbsp;</li>
	<li>Indira Mahila Sahakari Bank&nbsp;</li>
	<li>The Chitradurga District Co-operative Central Bank</li>
	<li>Samarth Sahakari Bank</li>
</ul>

The RBI&nbsp;in&nbsp;a press&nbsp;release&nbsp;said a penalty of INR 1 lakh ($1200) was imposed on The Vaish Co-operative Adarsh Bank, whereas the Central Co-operative Bank&nbsp;was fined&nbsp;INR 2 lakh ($2400). The RBI has asked Indira Mahila Sahakari Bank to pay INR 75,000 ($900) as a fine whereas both the Chitradurga District Co-operative Central Bank and Samarth Sahakari Bank have been fined worth INR 50,000 each ($600).

Also read:&nbsp;<a data-ved="2ahUKEwjpz_exz-eFAxV0rlYBHRh3B-0QxfQBKAB6BAgHEAE" href="https://www.wionews.com/india-news/rbi-restricts-kotak-mahindra-bank-no-new-customers-via-online-mobile-banking-halts-credit-card-issuance-714615" jsname="YKoRaf" ping="/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https://www.wionews.com/india-news/rbi-restricts-kotak-mahindra-bank-no-new-customers-via-online-mobile-banking-halts-credit-card-issuance-714615&amp;ved=2ahUKEwjpz_exz-eFAxV0rlYBHRh3B-0QxfQBKAB6BAgHEAE">RBI bars Kotak Mahindra Bank from issuing credit cards; Bank`s share price falls more than 11%</a>

“RBI in an inspection found out that the charge of delay in reporting of frauds by The Central Co-operative Bank,”&nbsp;the release added.

The release added that the Vaish Co-operative Adarsh Bank was also penalised for non-compliance with the directions issued by RBI on&nbsp;‘Know Your Customer (KYC) Directions, 2016’.

<h2>RBI cancels Acemoney India NBFC licence</h2>

Meanwhile, the RBI on Monday cancelled the certificate of registration of Acemoney India Ltd, a non-banking financial company (NBFC) based in the northwestern part of the national capital, citing irregular lending practices.

Also read:&nbsp;<a data-ved="2ahUKEwjpz_exz-eFAxV0rlYBHRh3B-0QxfQBKAB6BAgREAE" href="https://www.wionews.com/business-economy/rbi-governor-shaktikanta-das-hails-upi-heres-what-he-said-696628" jsname="YKoRaf" ping="/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https://www.wionews.com/business-economy/rbi-governor-shaktikanta-das-hails-upi-heres-what-he-said-696628&amp;ved=2ahUKEwjpz_exz-eFAxV0rlYBHRh3B-0QxfQBKAB6BAgREAE">RBI Governor Shaktikanta Das hails UPI. Here`s what he said</a>

The company&nbsp;"shall not transact the business of a Non-Banking Financial Institution (NBFI), as defined in clause (a) of Section 45-I of the RBI Act, 1934",&nbsp;the banking regulator said.

(With inputs from agencies)

India’s central bank on Monday (Apr 29) imposed a monetary penalty on five co-operative banks for multiple violations. The Reserve Bank of India (RBI) said all five banks were found in non-compliance of the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds - Guidelines for Classification, Reporting and Monitoring’.

India’s central bank on Monday (Apr 29) imposed a monetary penalty on five co-operative banks for multiple violations. The Reserve Bank of India (RBI) said all five banks were found in non-compliance of the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds - Guidelines for Classification, Reporting and Monitoring’. The five banks that have been penalised are as follows: The Central Co-operative Bank The Vaish Co-operative Adarsh Bank Indira Mahila Sahakari Bank The Chitradurga District Co-operative Central Bank Samarth Sahakari Bank The RBI in a press release said a penalty of INR 1 lakh ($1200) was imposed on The Vaish Co-operative Adarsh Bank, whereas the Central Co-operative Bank was fined INR 2 lakh ($2400). The RBI has asked Indira Mahila Sahakari Bank to pay INR 75,000 ($900) as a fine whereas both the Chitradurga District Co-operative Central Bank and Samarth Sahakari Bank have been fined worth INR 50,000 each ($600). Also read: RBI bars Kotak Mahindra Bank from issuing credit cards; Bank`s share price falls more than 11% “RBI in an inspection found out that the charge of delay in reporting of frauds by The Central Co-operative Bank,” the release added. The release added that the Vaish Co-operative Adarsh Bank was also penalised for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC) Directions, 2016’. RBI cancels Acemoney India NBFC licence Meanwhile, the RBI on Monday cancelled the certificate of registration of Acemoney India Ltd, a non-banking financial company (NBFC) based in the northwestern part of the national capital, citing irregular lending practices. Also read: RBI Governor Shaktikanta Das hails UPI. Here`s what he said The company "shall not transact the business of a Non-Banking Financial Institution (NBFI), as defined in clause (a) of Section 45-I of the RBI Act, 1934", the banking regulator said. (With inputs from agencies)

India’s RBI punishes five co-operative banks for rule violations, imposes fine

The Reserve Bank of India (RBI) ordered Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and from issuing fresh credit cards as well. The bank can, however, provide services to its existing customers, including its credit card customers.&nbsp;

As a result, Kotak Mahindra Bank's share price decreased 10.85% and closed at ₹1,643 on the BSE on Thursday (April 25).&nbsp;

"The Reserve Bank of India has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited (hereinafter referred to as 'the bank') to cease and desist, with immediate effect, from (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card customers," the RBI statement read.

According to the RBI, serious deficiencies and non compliances were found in the bank's IT inventory management, patch and change management, user access management, vendor risk management, data security, and leak prevention strategy, business continuity, and disaster recovery rigor and drill.&nbsp;

The RBI stated that Kotak Mahindra Bank's Core Banking System (CBS), as well as its online and digital banking channels, have experienced several outages in the last two years.

Also read:&nbsp;<a href="http://wionews.com/business-economy/rbi-foresees-8-pc-growth-amid-global-slowdown-signals-shifts-in-consumer-demand-702115" hreflang="en">RBI foresees 8 pc growth amid global slowdown, signals shifts in consumer demand</a>

"In the past two years, the Reserve Bank has been in continuous high-level engagement with the bank on all these concerns with a view to strengthening its IT resilience, but the outcomes have been far from satisfactory. It is also observed that, of late, there has been rapid growth in the volume of the bank’s digital transactions, including transactions pertaining to credit cards, which is building further load on the IT systems," RBI said.

"The Reserve Bank, therefore, has decided to place certain business restrictions on the bank in the interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank's ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems," RBI said in its statement.

Once Kotak Mahindra Banks completes an external audit with the RBI's prior consent and fixes any shortcomings found in the audit "to the satisfaction of the Reserve Bank," the restrictions will be reconsidered. 
 
(With inputs from agencies)

The Reserve Bank of India (RBI) ordered Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and from issuing fresh credit cards as well.

The Reserve Bank of India (RBI) ordered Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and from issuing fresh credit cards as well. The bank can, however, provide services to its existing customers, including its credit card customers. As a result, Kotak Mahindra Bank's share price decreased 10.85% and closed at ₹1,643 on the BSE on Thursday (April 25). "The Reserve Bank of India has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited (hereinafter referred to as 'the bank') to cease and desist, with immediate effect, from (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card customers," the RBI statement read. According to the RBI, serious deficiencies and non compliances were found in the bank's IT inventory management, patch and change management, user access management, vendor risk management, data security, and leak prevention strategy, business continuity, and disaster recovery rigor and drill. The RBI stated that Kotak Mahindra Bank's Core Banking System (CBS), as well as its online and digital banking channels, have experienced several outages in the last two years. Also read: RBI foresees 8 pc growth amid global slowdown, signals shifts in consumer demand "In the past two years, the Reserve Bank has been in continuous high-level engagement with the bank on all these concerns with a view to strengthening its IT resilience, but the outcomes have been far from satisfactory. It is also observed that, of late, there has been rapid growth in the volume of the bank’s digital transactions, including transactions pertaining to credit cards, which is building further load on the IT systems," RBI said. "The Reserve Bank, therefore, has decided to place certain business restrictions on the bank in the interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank's ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems," RBI said in its statement. Once Kotak Mahindra Banks completes an external audit with the RBI's prior consent and fixes any shortcomings found in the audit "to the satisfaction of the Reserve Bank," the restrictions will be reconsidered. (With inputs from agencies)

RBI bars Kotak Mahindra Bank from issuing credit cards; Bank's share price falls more than 11%

The currency market in India is bracing for a tectonic shift. In a bid to arrest the volatility in the Indian rupee, the Reserve Bank of India announced curbs on currency derivatives trading. But what exactly is currency derivatives and how will this rule impact traders?

New rule to impact 80% of volumes in currency derivatives market

India's Central Bank -- the Reserve Bank of India -- is likely to keep the interest rates on hold until July. The reasons? Strong economic growth and moderating inflation.

RBI widely expected to keep rates unchanged on Friday

The Reserve Bank of India is taking a significant step towards enhancing transparency in the financial sector. In a bid to address the looming threat of climate change, the RBI has called upon lenders to disclose more structured information about their climate-related financial risks.

Reserve Bank of India mandates climate risk disclosure for financial institutions

Indian central bank, the Reserve Bank of India (RBI), has asked banks in the country to ditch the traditional SMS-based second-factor authentication system and seek safer, advanced alternatives. As per media reports, while there are multiple options available, all include the use of a user’s mobile phone for authentication.

The RBI issued a detailed statement on Development and Regulatory Policies on February 8 on its website but did not lay out instructions in this regard as of now.

<h2>The current OTP-based regime</h2>

Currently, whenever we conduct a digital financial transaction, the fintech firm or bank typically sends an OTP to the mobile number linked to the account as an extra layer of authentication. The transaction can only proceed after entering this OTP, ensuring the security of bank accounts and preventing unauthorised use of financial data.

The RBI has not indicated any intention to completely eliminate the authentication process, but rather to streamline the AFA (additional factor of authentication) process.

Watch:&nbsp;Paytm Bank's Crisis: Traders urged to ditch Paytm in wake of RBI's decision

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“Though RBI has not prescribed any particular AFA, the payments ecosystem has largely adopted SMS-based one-time password (OTP). With innovations in technology, alternative authentication mechanisms have emerged in recent years. To facilitate the use of such mechanisms for digital security, it is proposed to adopt a principle-based "Framework for authentication of digital payment transactions," reads the statement.

Also read:&nbsp;<a data-jsarwt="1" data-usg="AOvVaw35jmPoiykBKk45inSuoXiw" data-ved="2ahUKEwjpjPyUz6OEAxW-T2wGHaj1D14QxfQBKAB6BAgPEAE" href="https://www.wionews.com/business-economy/paytm-ceo-advised-by-government-no-intervention-in-rbi-clampdown-687746" jsname="YKoRaf">Paytm CEO Advised by Government: No intervention in RBI clampdown</a>

In the same context, the RBI has suggested simplifying the onboarding process for Aadhaar-enabled payment system (AePS) touchpoint operators, to be supervised by banks. Additionally, they will consider additional requirements for managing fraud risks.

<h2>Safer OTP-less alternative</h2>

Route Mobile's latest initiative, TruSense, has introduced an innovative OTP-less authentication system. This method allows service providers to establish direct data connections with users' devices, facilitating identification and token exchange without requiring OTP input from users.

David Vigar, Executive Vice President overseeing digital identity, warned against relying solely on biometrics for authentication. He highlighted the risks posed by advancements in artificial intelligence, particularly the potential for deepfake technology to bypass facial recognition systems.

(With inputs from agencies)

Indian central bank, the Reserve Bank of India (RBI), has asked banks in the country to ditch the traditional SMS-based second-factor authentication system and seek safer, advanced alternatives.

Indian central bank, the Reserve Bank of India (RBI), has asked banks in the country to ditch the traditional SMS-based second-factor authentication system and seek safer, advanced alternatives. As per media reports, while there are multiple options available, all include the use of a user’s mobile phone for authentication. The RBI issued a detailed statement on Development and Regulatory Policies on February 8 on its website but did not lay out instructions in this regard as of now. The current OTP-based regime Currently, whenever we conduct a digital financial transaction, the fintech firm or bank typically sends an OTP to the mobile number linked to the account as an extra layer of authentication. The transaction can only proceed after entering this OTP, ensuring the security of bank accounts and preventing unauthorised use of financial data. The RBI has not indicated any intention to completely eliminate the authentication process, but rather to streamline the AFA (additional factor of authentication) process. Watch: Paytm Bank's Crisis: Traders urged to ditch Paytm in wake of RBI's decision × “Though RBI has not prescribed any particular AFA, the payments ecosystem has largely adopted SMS-based one-time password (OTP). With innovations in technology, alternative authentication mechanisms have emerged in recent years. To facilitate the use of such mechanisms for digital security, it is proposed to adopt a principle-based "Framework for authentication of digital payment transactions," reads the statement. Also read: Paytm CEO Advised by Government: No intervention in RBI clampdown In the same context, the RBI has suggested simplifying the onboarding process for Aadhaar-enabled payment system (AePS) touchpoint operators, to be supervised by banks. Additionally, they will consider additional requirements for managing fraud risks. Safer OTP-less alternative Route Mobile's latest initiative, TruSense, has introduced an innovative OTP-less authentication system. This method allows service providers to establish direct data connections with users' devices, facilitating identification and token exchange without requiring OTP input from users. David Vigar, Executive Vice President overseeing digital identity, warned against relying solely on biometrics for authentication. He highlighted the risks posed by advancements in artificial intelligence, particularly the potential for deepfake technology to bypass facial recognition systems. (With inputs from agencies)

India: RBI asks banks to stop relying on OTP-based authentication, look for safer alternatives

Persistent non-compliance by Paytm with the regulatory guidelines despite nudges over a period of time ultimately led to the stern action against the fintech, the RBI said on Thursday and also made it clear that there are no systemic worries. 
 
Without disclosing specific details of what led to the action against the fintech, Governor Shaktikanta Das made it clear that Paytm's lack of compliance to regulations does not pose a systemic threat. 
 
"There is no worry about the system at the moment. Here we are talking about a specific institution, a specific payment bank," Das told reporters at the central bank headquarters here at the customary post-policy media briefing.

Deputy Governor Swaminathan J said the January 31 action against Paytm Payments Bank, wherein the RBI has barred it from onbaording new customers, and asked to stop services related to deposits, prepaid instruments and e-wallet after February 29, was the culmination of a long series of bilateral engagement.

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/paytm-faces-regulatory-hurdles-in-india-while-walmart-google-seize-market-opportunity-687706">Paytm faces regulatory hurdles in India while Walmart, Google seize market opportunity</a> 
 
"This is a supervisory action on a regulated entity for persistent non-compliance. Such supervisory actions are invariably preceded by months and at times years of bilateral engagement, where we not only point out deficiencies but also provide more than adequate time for them to take corrective action," the commercial banker-turned-regulator said. 
 
Das said it starts with "nudges" from the regulator for corrective action and sometimes the RBI may give more than sufficient time to an entity to comply, and it is lack of compliance which ultimately leads to the business restrictions order. 
 
The proportionality aspect is taken into consideration before imposing any restriction, Das said, adding, "all our actions are in the best interest of systemic stability and protection of depositors or customers' interest.

"These aspects cannot be compromised. Individual entities should be mindful of these aspects for their long-term success."

Earlier in the day, Das' statement stressed on "good governance, robust risk management, sound compliance culture and protection of customers' interest" being of paramount importance for the Reserve Bank.

Das said there are a lot of questions and concerns in the minds of people, and the Reserve Bank will be coming out with a detailed FAQ (frequently asked questions) next week which will make things clear.

When asked about the decision to impose the rather strong action of business restrictions, without going for other alternatives like appointing a director on the board as it has done in some cases in the recent past, Swaminathan said an "one size fits all kind of solution may not work in such situations".

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/explained-rbi-orders-paytms-banking-arm-to-stop-fresh-business-what-happens-next-685969">Explained | RBI orders Paytm’s banking arm to stop fresh business. What happens next?</a>

"As a regulator, it's incumbent upon us to protect the interests of the ultimate consumer and thereby protecting the stability of the financial system," Swaminathan said.

He was tightlipped about the future course of action, but promised that customers' inconvenience will be minimized.

When asked about the reasons for the action, specifically if it has been triggered by the ownership structure at Paytm or if it is limited to KYC concerns, Das declined to reveal anything about the "bilateral engagements".

"The regulations are robust. It is not a case where there was a regulatory deficiency or there was a regulatory correction required. It's an issue of compliance, compliance with various parameters," he said.

Persistent non-compliance by Paytm with the regulatory guidelines despite nudges over a period of time ultimately led to the stern action against the fintech, the RBI said on Thursday and also made it clear that there are no systemic worries.

Persistent non-compliance by Paytm with the regulatory guidelines despite nudges over a period of time ultimately led to the stern action against the fintech, the RBI said on Thursday and also made it clear that there are no systemic worries. Without disclosing specific details of what led to the action against the fintech, Governor Shaktikanta Das made it clear that Paytm's lack of compliance to regulations does not pose a systemic threat. "There is no worry about the system at the moment. Here we are talking about a specific institution, a specific payment bank," Das told reporters at the central bank headquarters here at the customary post-policy media briefing. Deputy Governor Swaminathan J said the January 31 action against Paytm Payments Bank, wherein the RBI has barred it from onbaording new customers, and asked to stop services related to deposits, prepaid instruments and e-wallet after February 29, was the culmination of a long series of bilateral engagement. ALSO READ | Paytm faces regulatory hurdles in India while Walmart, Google seize market opportunity "This is a supervisory action on a regulated entity for persistent non-compliance. Such supervisory actions are invariably preceded by months and at times years of bilateral engagement, where we not only point out deficiencies but also provide more than adequate time for them to take corrective action," the commercial banker-turned-regulator said. Das said it starts with "nudges" from the regulator for corrective action and sometimes the RBI may give more than sufficient time to an entity to comply, and it is lack of compliance which ultimately leads to the business restrictions order. The proportionality aspect is taken into consideration before imposing any restriction, Das said, adding, "all our actions are in the best interest of systemic stability and protection of depositors or customers' interest. "These aspects cannot be compromised. Individual entities should be mindful of these aspects for their long-term success." Earlier in the day, Das' statement stressed on "good governance, robust risk management, sound compliance culture and protection of customers' interest" being of paramount importance for the Reserve Bank. Das said there are a lot of questions and concerns in the minds of people, and the Reserve Bank will be coming out with a detailed FAQ (frequently asked questions) next week which will make things clear. When asked about the decision to impose the rather strong action of business restrictions, without going for other alternatives like appointing a director on the board as it has done in some cases in the recent past, Swaminathan said an "one size fits all kind of solution may not work in such situations". ALSO READ | Explained | RBI orders Paytm’s banking arm to stop fresh business. What happens next? "As a regulator, it's incumbent upon us to protect the interests of the ultimate consumer and thereby protecting the stability of the financial system," Swaminathan said. He was tightlipped about the future course of action, but promised that customers' inconvenience will be minimized. When asked about the reasons for the action, specifically if it has been triggered by the ownership structure at Paytm or if it is limited to KYC concerns, Das declined to reveal anything about the "bilateral engagements". "The regulations are robust. It is not a case where there was a regulatory deficiency or there was a regulatory correction required. It's an issue of compliance, compliance with various parameters," he said.

Persistent non-compliance led to Paytm action, no systemic worries: RBI

UPI has been one of India's great success stories, well it is now among the top payment methods in the country. To improve user experience - the Reserve Bank of India - has announced new UPI updates and changes.

UPI transaction: New regulations and changes, Inactive UPI accounts to be deactivated

India's central bank left its key repo rate unchanged at 6.5 per cent on Friday but warned elevated food inflation is still a concern.

After six consecutive rate hikes between April 2022 and February this year, the Reserve Bank of India has kept monetary policy on hold.

The likelihood the central bank hints at rate cuts was factored in before today's decision and comments from Governor Shaktikanta Das.

“Monetary policy will remain actively disinflationary,” said the governor.

But the RBI more or less dashed those expectations by sounding hawkish in its assessment of inflation.

Households hoping for some relief from already stretched budgets will, for now, have to deal with high borrowing costs.

RBI Policy: Inflation still a worry?

While inflation has eased for a few months, the central bank voiced concerns about food prices.

Retail inflation will remain above 5 per cent&nbsp;this fiscal year and next.

So, for consumers dealing with higher monthly payments towards their loans, any hope for them to come down anytime soon is just that - hope.

RBI Policy: Robust growth outlook

Despite a gloomy outlook for the global economy from the ongoing geopolitical unrest in West Asia and on the edge of Europe, the central bank sounded positive about the domestic economy.

Governor Das said India remains the fastest-growing major economy globally and has surprised everyone with its upside.

"The Indian economy presents a picture of resilience and momentum," according to Das.

"Growth remains resilient and robust, surprising everyone," he said.

After faster-than-anticipated growth in the July–September quarter, the central bank projects the economy to grow by 7 per cent&nbsp;in the current fiscal year, up from 6.5% in the previous year.

That helps the narrative for India's monetary policy on hold for longer as the country's bane for decades - supply-driven high inflation - still weighs on central bank decisions.

The deputy chief economist for emerging markets at Capital Economics, Shilan Shah, said, "The economy is performing exceptionally well, which limits any immediate need for looser policy."

RBI Governor said the inflation outlook, however, remains uncertain. He added that the near-term outlook is "masked by risks to food inflation."

On policy easing, Das said "loosening" was off the table, at the moment.

RBI Policy:&nbsp;Ahead of the curve?

The RBI wants to be ahead of the curve after dismissing rising price pressures as "transitory" in 2021, similar to reactions from major global central banks back then.

The world underestimated surging inflation and had to react more aggressively when price pressures soared to multi-decade highs globally.

But bets in recent months have increased for global interest rates to ease next year.

The RBI's tone suggested otherwise and pushed back on expectations for a rate cut cycle to later than earlier.

RBI Policy: What does it mean for consumers?

Clearly, the RBI's plans and commentary suggest there will be no respite from higher borrowing costs, especially for those with home loans.

The central bank's aggressive rate hikes pushed up equated monthly instalments for borrowers already dealing with higher prices of almost everything.

For some, the loan duration was increased by about five years.

Even if the RBI does start to cut rates at some point, the translation to lending costs will take longer.

Indeed, usually, banks pass on any change in rates on the up almost immediately to consumers but take longer to transmit any easing in interest rates.

WATCH WION LIVE HERE

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India's central bank left its key repo rate unchanged at 6.5 per cent on Friday but warned elevated food inflation is still a concern. After six consecutive rate hikes between April 2022 and February this year, the Reserve Bank of India has kept monetary policy on hold.

India's central bank left its key repo rate unchanged at 6.5 per cent on Friday but warned elevated food inflation is still a concern. After six consecutive rate hikes between April 2022 and February this year, the Reserve Bank of India has kept monetary policy on hold. The likelihood the central bank hints at rate cuts was factored in before today's decision and comments from Governor Shaktikanta Das. “Monetary policy will remain actively disinflationary,” said the governor. But the RBI more or less dashed those expectations by sounding hawkish in its assessment of inflation. Households hoping for some relief from already stretched budgets will, for now, have to deal with high borrowing costs. RBI Policy: Inflation still a worry? While inflation has eased for a few months, the central bank voiced concerns about food prices. Retail inflation will remain above 5 per cent this fiscal year and next. So, for consumers dealing with higher monthly payments towards their loans, any hope for them to come down anytime soon is just that - hope. RBI Policy: Robust growth outlook Despite a gloomy outlook for the global economy from the ongoing geopolitical unrest in West Asia and on the edge of Europe, the central bank sounded positive about the domestic economy. Governor Das said India remains the fastest-growing major economy globally and has surprised everyone with its upside. "The Indian economy presents a picture of resilience and momentum," according to Das. "Growth remains resilient and robust, surprising everyone," he said. After faster-than-anticipated growth in the July–September quarter, the central bank projects the economy to grow by 7 per cent in the current fiscal year, up from 6.5% in the previous year. That helps the narrative for India's monetary policy on hold for longer as the country's bane for decades - supply-driven high inflation - still weighs on central bank decisions. The deputy chief economist for emerging markets at Capital Economics, Shilan Shah, said, "The economy is performing exceptionally well, which limits any immediate need for looser policy." RBI Governor said the inflation outlook, however, remains uncertain. He added that the near-term outlook is "masked by risks to food inflation." On policy easing, Das said "loosening" was off the table, at the moment. RBI Policy: Ahead of the curve? The RBI wants to be ahead of the curve after dismissing rising price pressures as "transitory" in 2021, similar to reactions from major global central banks back then. The world underestimated surging inflation and had to react more aggressively when price pressures soared to multi-decade highs globally. But bets in recent months have increased for global interest rates to ease next year. The RBI's tone suggested otherwise and pushed back on expectations for a rate cut cycle to later than earlier. RBI Policy: What does it mean for consumers? Clearly, the RBI's plans and commentary suggest there will be no respite from higher borrowing costs, especially for those with home loans. The central bank's aggressive rate hikes pushed up equated monthly instalments for borrowers already dealing with higher prices of almost everything. For some, the loan duration was increased by about five years. Even if the RBI does start to cut rates at some point, the translation to lending costs will take longer. Indeed, usually, banks pass on any change in rates on the up almost immediately to consumers but take longer to transmit any easing in interest rates. WATCH WION LIVE HERE

RBI policy: Reserve Bank of India's hawkish pause keeps households on edge

Recent data from the Reserve Bank of India (RBI) reveals a concerning trend in Indian household savings, painting a picture of an income crisis amidst rising costs of living.

Here's what the data tells us in simple terms:

Declining Savings:

In the fiscal year 2023, household net financial savings (which means savings after accounting for debts) shrank by 19%, showing a drop in people's ability to save money. This is in contrast to a 2% average growth over the previous four years.

Borrowing on the Rise:

People are borrowing more to bridge the gap between their income and expenses. In FY23, non-mortgage borrowing, excluding housing loans, shot up by 99%. This indicates that more individuals are turning to loans to maintain their lifestyles, compared to the 24% average increase over four years.

Slow Income Growth:

Despite an 8.9% increase in private consumption spending over four years, when adjusted for inflation, it amounts to a meager 3.2% growth in real terms. The estimated real income growth is just 2.9%, one of the slowest in 40 years.

Assets vs. Liabilities:

While financial assets like deposits, mutual funds, and equities grew by 13.9% in FY23, financial liabilities, or debts, grew even faster at 75.5%. This means that the increase in savings is overshadowed by the surge in debts.

Physical Savings:

The physical savings of households, which include investments in tangible assets, only grew by 6.2%, indicating a struggle to save money beyond their immediate expenses.

Consumer Lending on the Rise:

Home loans are no longer the dominant form of lending. Instead, there is an increase in consumer lending. Outstanding retail loans of banks have hit a 30-year high at 30% in FY23, while the contribution of home loans has fallen from 56% in FY16 to 47% in FY23.

In summary, Indian households are facing an income challenge, where they are struggling to save while simultaneously grappling with the rising cost of living. As a result, they are resorting to loans to sustain their lifestyles. This trend has led to one of the slowest income growth rates in 40 years, suggesting that a significant portion of the population is finding it hard to make ends meet.

The data reveals the structural fragility of the Indian economy, with income growth consistently trailing behind consumption growth, making this one of the longest phases of income shortfall in decades. This situation underscores the need for measures to boost income and ensure that households can save and invest for their future, thus achieving financial stability.

Recent data from the Reserve Bank of India (RBI) reveals a concerning trend in Indian household savings, painting a picture of an income crisis amidst rising costs of living.

Recent data from the Reserve Bank of India (RBI) reveals a concerning trend in Indian household savings, painting a picture of an income crisis amidst rising costs of living. Here's what the data tells us in simple terms: Declining Savings: In the fiscal year 2023, household net financial savings (which means savings after accounting for debts) shrank by 19%, showing a drop in people's ability to save money. This is in contrast to a 2% average growth over the previous four years. Borrowing on the Rise: People are borrowing more to bridge the gap between their income and expenses. In FY23, non-mortgage borrowing, excluding housing loans, shot up by 99%. This indicates that more individuals are turning to loans to maintain their lifestyles, compared to the 24% average increase over four years. Slow Income Growth: Despite an 8.9% increase in private consumption spending over four years, when adjusted for inflation, it amounts to a meager 3.2% growth in real terms. The estimated real income growth is just 2.9%, one of the slowest in 40 years. Assets vs. Liabilities: While financial assets like deposits, mutual funds, and equities grew by 13.9% in FY23, financial liabilities, or debts, grew even faster at 75.5%. This means that the increase in savings is overshadowed by the surge in debts. Physical Savings: The physical savings of households, which include investments in tangible assets, only grew by 6.2%, indicating a struggle to save money beyond their immediate expenses. Consumer Lending on the Rise: Home loans are no longer the dominant form of lending. Instead, there is an increase in consumer lending. Outstanding retail loans of banks have hit a 30-year high at 30% in FY23, while the contribution of home loans has fallen from 56% in FY16 to 47% in FY23. In summary, Indian households are facing an income challenge, where they are struggling to save while simultaneously grappling with the rising cost of living. As a result, they are resorting to loans to sustain their lifestyles. This trend has led to one of the slowest income growth rates in 40 years, suggesting that a significant portion of the population is finding it hard to make ends meet. The data reveals the structural fragility of the Indian economy, with income growth consistently trailing behind consumption growth, making this one of the longest phases of income shortfall in decades. This situation underscores the need for measures to boost income and ensure that households can save and invest for their future, thus achieving financial stability.

News In Numbers: Worrying income and spending trends in India

Independence Day is celebrated in India on August 15, when the country got freedom from the oppressive British colonial rule in 1947 after decades of struggle and sacrifices.&nbsp;

The end of British rule and the establishment of an independent nation also led to the division of the subcontinent into two parts — India and Pakistan. The Partition was marked by an outbreak of violence over the division of territories, powers and assets.&nbsp;

But have you wondered how the nations started to function immediately after partition, especially in Pakistan without any central banking system?&nbsp;

The partition posed several delicate problems as there were arrangements needed over issues related&nbsp;to currency and coinage, management of exchange and public debt, transfer of staff and property and division of profits, assets and liabilities.&nbsp;

Following the acceptance in principle of Partition, a special committee of the cabinet was set up by the interim government "to examine the administrative consequences of Partition and to take necessary steps for the transfer of power to the two Dominions".&nbsp;

Later, the Committee was replaced, from July 1, 1947, by the Partition Council, which had the Governor General as its Chairman and two representatives each of the Indian National Congress and the Muslim League as its members.&nbsp;

After 1947:

It is an interesting fact that the Reserve Bank of India used to supply currency to newly-established Pakistan and it also served as the central bank till the State Bank of Pakistan commenced operations.&nbsp;

The first currency to be used in Pakistan after its creation was the Indian Rupee, which had "Government of Pakistan" printed on it in English and "Hakumat-e-Pakistan" printed in Urdu on the white area of the note.&nbsp;

As per the RBI documents: "Under the arrangements agreed upon, the Bank was to be the currency authority in Pakistan and banker to the Central and Provincial Governments in Pakistan till the end of September 1948. It was also required to manage Pakistan's exchange control and public debt till the end of March 1948."

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The documents also added: "The Bank was to have the sole right to issue notes in Pakistan up to September 30, 1948. While Indian notes were to continue to remain legal tender in Pakistan up to September 30, 1948, the Order provided for the issue by the Bank, from April 1, 1948, of notes in Pakistan, carrying the inscription ‘Government of Pakistan’ in English and Urdu."

As per the provisions, it was agreed that the existing currency and coinage would remain common to both territories up to March 31, 1948. The subsequent six months (April-September) would be a transitional period, during which only Pakistan overprinted notes would be issued in Pakistan areas but Indian notes already in circulation in Pakistan would continue to remain legal tender there.&nbsp;

It was also decided that the minting of Pakistan's new design coins would start on March 1, 1948, and would be issued in Pakistan from April 1, 1948.&nbsp;

Later, the Reserve Bank ceased to function&nbsp;as the central bank for Pakistan three months earlier than the scheduled date, i.e., from July 1, 1948.

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Independence Day is celebrated in India on August 15, when the country got freedom from the oppressive British colonial rule in 1947 after decades of struggle and sacrifices.

Independence Day is celebrated in India on August 15, when the country got freedom from the oppressive British colonial rule in 1947 after decades of struggle and sacrifices. The end of British rule and the establishment of an independent nation also led to the division of the subcontinent into two parts — India and Pakistan. The Partition was marked by an outbreak of violence over the division of territories, powers and assets. But have you wondered how the nations started to function immediately after partition, especially in Pakistan without any central banking system? The partition posed several delicate problems as there were arrangements needed over issues related to currency and coinage, management of exchange and public debt, transfer of staff and property and division of profits, assets and liabilities. Following the acceptance in principle of Partition, a special committee of the cabinet was set up by the interim government "to examine the administrative consequences of Partition and to take necessary steps for the transfer of power to the two Dominions". Later, the Committee was replaced, from July 1, 1947, by the Partition Council, which had the Governor General as its Chairman and two representatives each of the Indian National Congress and the Muslim League as its members. After 1947: It is an interesting fact that the Reserve Bank of India used to supply currency to newly-established Pakistan and it also served as the central bank till the State Bank of Pakistan commenced operations. The first currency to be used in Pakistan after its creation was the Indian Rupee, which had "Government of Pakistan" printed on it in English and "Hakumat-e-Pakistan" printed in Urdu on the white area of the note. As per the RBI documents: "Under the arrangements agreed upon, the Bank was to be the currency authority in Pakistan and banker to the Central and Provincial Governments in Pakistan till the end of September 1948. It was also required to manage Pakistan's exchange control and public debt till the end of March 1948." The documents also added: "The Bank was to have the sole right to issue notes in Pakistan up to September 30, 1948. While Indian notes were to continue to remain legal tender in Pakistan up to September 30, 1948, the Order provided for the issue by the Bank, from April 1, 1948, of notes in Pakistan, carrying the inscription ‘Government of Pakistan’ in English and Urdu." As per the provisions, it was agreed that the existing currency and coinage would remain common to both territories up to March 31, 1948. The subsequent six months (April-September) would be a transitional period, during which only Pakistan overprinted notes would be issued in Pakistan areas but Indian notes already in circulation in Pakistan would continue to remain legal tender there. It was also decided that the minting of Pakistan's new design coins would start on March 1, 1948, and would be issued in Pakistan from April 1, 1948. Later, the Reserve Bank ceased to function as the central bank for Pakistan three months earlier than the scheduled date, i.e., from July 1, 1948. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Did you know? India used to print currency for Pakistan for almost one year after Independence

RBI keeps repo rate unchanged:&nbsp;On Thursday (August 10), India's central bank, the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 6.50 per cent, Governor Shaktikanta Das announced presiding at the Monetary Policy Committee (MPC) meeting.&nbsp;

"Monetary Policy Committee decided unanimously to keep the Repo Rate unchanged at 6.50 per cent," said Das, adding that the Indian economy had made significant progress towards controlling inflation.&nbsp;

"Our economy has continued to grow at a reasonable pace becoming the 5th largest economy in the world, contributing around 15% to global growth," said Das.&nbsp;

However, India's premier stock indices Sensex and Nifty dropped 0.5 per cent after the monetary policy announcement.&nbsp;

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This was the third consecutive meeting where MPC - responsible for fixing the benchmark interest rate, maintained the status quo on the repo rate.&nbsp;Notably, it was in April that the central bank finally applied the brakes&nbsp;on&nbsp;rate hikes after announcing six hikes&nbsp;since May last year to a cumulative 250 basis points.&nbsp;

While announcing the bi-monthly monetary policy, Das said MPC will remain focussed on the withdrawal of&nbsp;accommodation.&nbsp;

Das, however, added that the global economy continues to face challenges.&nbsp;

"Global economy continues to face daunting challenges of inflation, geo-political uncertainty and extreme weather conditions," he added.&nbsp;

<h2>What is repo rate?</h2>

When commercial banks loan by selling their securities to the central bank, the RBI charges them an interest rate. This interest rate is called the repo rate in the monetary policy. Lower interest rates make it easier for individuals and businesses to borrow money to invest in new economic activities.&nbsp;

 
(With inputs from agencies)

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RBI keeps repo rate unchanged: On Thursday (August 10), India's central bank, the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 6.50 per cent, Governor Shaktikanta Das announced presiding at the Monetary Policy Committee (MPC) meeting.

RBI keeps repo rate unchanged: On Thursday (August 10), India's central bank, the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 6.50 per cent, Governor Shaktikanta Das announced presiding at the Monetary Policy Committee (MPC) meeting. "Monetary Policy Committee decided unanimously to keep the Repo Rate unchanged at 6.50 per cent," said Das, adding that the Indian economy had made significant progress towards controlling inflation. "Our economy has continued to grow at a reasonable pace becoming the 5th largest economy in the world, contributing around 15% to global growth," said Das. However, India's premier stock indices Sensex and Nifty dropped 0.5 per cent after the monetary policy announcement. #WATCH | RBI Governor Shaktikanta Das says "Our economy has continued to grow at a reasonable pace becoming the 5th largest economy in the world, contributing around 15% to global growth" pic.twitter.com/QKK2fJHsdu — ANI (@ANI) August 10, 2023 × This was the third consecutive meeting where MPC - responsible for fixing the benchmark interest rate, maintained the status quo on the repo rate. Notably, it was in April that the central bank finally applied the brakes on rate hikes after announcing six hikes since May last year to a cumulative 250 basis points. While announcing the bi-monthly monetary policy, Das said MPC will remain focussed on the withdrawal of accommodation. Das, however, added that the global economy continues to face challenges. "Global economy continues to face daunting challenges of inflation, geo-political uncertainty and extreme weather conditions," he added. What is repo rate? When commercial banks loan by selling their securities to the central bank, the RBI charges them an interest rate. This interest rate is called the repo rate in the monetary policy. Lower interest rates make it easier for individuals and businesses to borrow money to invest in new economic activities. (With inputs from agencies) WATCH WION LIVE HERE:

India: Reserve Bank of India keeps repo rate unchanged at 6.5%

India’s retail inflation jumped to a three-month high of 4.81 per cent on account of higher food prices, but remains within the tolerable range of the Reserve Bank of India (RBI), the government data showed on Wednesday.

The surge in inflation&nbsp;is being attributed to a higher-than-expected supportive base, besides the rise in vegetable prices, shows the data by the Ministry of Statistics &amp; Programme Implementation.

Last month, the inflation based on the Consumer Price Index (CPI) was at 4.31 per cent. In May it was 2.43 per cent and 7.75 per cent in June of the previous year.

The food basket accounts for nearly half of the CPI. The major elements driving inflation are cereals (12.7 per cent), eggs (7 per cent), milk (8.6 per cent), pulses (10.5 per cent) and spices. Household goods, personal care items, education and health have inflation of above 5 per cent.

Clothing and footwear recorded an inflation of 6.19 per cent, fuel and light inflation were at 3.92 per cent, and miscellaneous saw inflation of 5.19 per cent.

Inflation is an important yardstick for the RBI’s Monetary Policy Committee to determine the repo or the lending rate of the country and it is mandated to ensure that retail inflation hovers around 4 per cent with a margin of 2 per cent on either side.

Last month, the Reserve Bank kept policy rates unchanged at 6.5 per cent and projected retail inflation for the current fiscal to average at 5.1 per cent, with June quarter inflation pegged at 4.6 per cent.

The next policy review is scheduled for early next month.

<h2>India's IIP rises&nbsp;</h2>

On the other hand, India's industrial production surged to 5.2 per cent in May from 4.5% per cent in April 2023, due to good performance by the manufacturing and mining sectors, the official data said.

The factory output growth measured in terms of IIP stood at 19.7 per cent in May 2022, mainly due to a lower base effect.

"The growth rates over corresponding period of previous year are to be interpreted, considering the unusual circumstances on account of COVID 19 pandemic since March 2020," the official statement said.

(With inputs from agencies)

&nbsp;

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India’s retail inflation jumped to a three-month high of 4.81 per cent on account of higher food prices, but remains within the tolerable range of the Reserve Bank of India (RBI), the government data showed on Wednesday.

India’s retail inflation jumped to a three-month high of 4.81 per cent on account of higher food prices, but remains within the tolerable range of the Reserve Bank of India (RBI), the government data showed on Wednesday. The surge in inflation is being attributed to a higher-than-expected supportive base, besides the rise in vegetable prices, shows the data by the Ministry of Statistics & Programme Implementation. Last month, the inflation based on the Consumer Price Index (CPI) was at 4.31 per cent. In May it was 2.43 per cent and 7.75 per cent in June of the previous year. The food basket accounts for nearly half of the CPI. The major elements driving inflation are cereals (12.7 per cent), eggs (7 per cent), milk (8.6 per cent), pulses (10.5 per cent) and spices. Household goods, personal care items, education and health have inflation of above 5 per cent. Clothing and footwear recorded an inflation of 6.19 per cent, fuel and light inflation were at 3.92 per cent, and miscellaneous saw inflation of 5.19 per cent. Inflation is an important yardstick for the RBI’s Monetary Policy Committee to determine the repo or the lending rate of the country and it is mandated to ensure that retail inflation hovers around 4 per cent with a margin of 2 per cent on either side. Last month, the Reserve Bank kept policy rates unchanged at 6.5 per cent and projected retail inflation for the current fiscal to average at 5.1 per cent, with June quarter inflation pegged at 4.6 per cent. The next policy review is scheduled for early next month. India's IIP rises On the other hand, India's industrial production surged to 5.2 per cent in May from 4.5% per cent in April 2023, due to good performance by the manufacturing and mining sectors, the official data said. The factory output growth measured in terms of IIP stood at 19.7 per cent in May 2022, mainly due to a lower base effect. "The growth rates over corresponding period of previous year are to be interpreted, considering the unusual circumstances on account of COVID 19 pandemic since March 2020," the official statement said. (With inputs from agencies) WATCH WION LIVE HERE

India’s retail inflation jumps to three-month high of 4.81% due to higher food prices

The Reserve Bank of India (RBI) unveiled a groundbreaking draft regulation that grants debit, credit, and prepaid cardholders the authority to select their desired card network. This regulation marks a potential revolution in the global credit card industry, challenging the prevailing practice where card network options are predetermined through agreements between issuers and networks.

Promoting customer choice and flexibility

The RBI's draft circular prohibits card issuers from entering into agreements that restrict them from accessing services of other card networks. The current arrangements between card networks and issuers, including banks and non-banking institutions, are deemed inadequate in promoting customer choice and availability. The proposed regulation aims to enhance flexibility and competition in the credit card market, allowing users to choose the card network that best suits their preferences and requirements.

Under the new regulations, cardholders will have the flexibility to migrate to a different payment network while keeping their existing card accounts, balances, and credit history intact. This concept of card network portability enables consumers to transfer their card accounts from one network to another, similar to switching mobile service providers while retaining the same phone number.

Operational challenges and increased costs

While the draft regulation holds significant advantages for customers, such as decision-making authority and portability, banks may face operational challenges and increased costs. Banks will need to review existing agreements, establish new partnerships, adjust customer onboarding processes, provide additional training, and reevaluate customer profiling. The impact on the manufacturing process of banking cards is another factor that banks will need to evaluate in the coming months. With the proposed implementation date set for October 1, 2023, banks face a tight timeline of less than 90 days to implement the extensive organizational changes.

Primary Beneficiaries

The primary beneficiaries of this new regulation are customers, as card issuers will be obligated to offer more than one card network and provide the option for customers to choose their preferred network during card issuance or even afterward. This move also opens up the potential for innovative offerings by different network providers, offering broader advantages for customers in the future.

In India, authorized card networks, including MasterCard, Visa, American Express Banking Corp, Diners Club International, and National Payments Corporation of India - RuPay, partner with banks and non-banking financial institutions for card issuance. Previously, banks had been exclusively tying up with a few dominant networks, limiting customer choice. The RBI's proposed regulation aims to eliminate such restrictions and promote a level playing field for all card networks.

India's credit card market: A Snapshot

The credit card market in India has been booming, with credit card outstanding reaching Rs 2 lakh crore, a year-on-year rise of 29.7 per cent. Banks have issued 8.65 crore credit cards as of April 2023, with monthly credit payments exceeding Rs one lakh crore. The surge in credit card usage reflects the growing purchasing power of the country. However, it is crucial to ensure responsible practices by credit card companies while issuing cards, considering the significant outstanding debt.

RuPay: Striving for dominance

RuPay, India's domestic card payment network, has been striving to gain a foothold in the credit card space, which is dominated by international networks like Visa and MasterCard. RuPay's dominance in the debit card market, capturing 65 per cent of the market share, contrasts with its minimal presence in the credit card space. The government has been promoting RuPay through initiatives such as linking credit cards to UPI and may consider further incentives to boost its adoption.

The RBI's draft regulation is expected to significantly change the credit card landscape, providing customers with greater choices and fostering competition among card networks. Stakeholders have been invited to provide their comments on the proposal, with the potential mandate expected to come into effect in October.

(With Inputs from Agencies)

The Reserve Bank of India (RBI) unveiled a groundbreaking draft regulation that grants debit, credit, and prepaid cardholders the authority to select their desired card network.

The Reserve Bank of India (RBI) unveiled a groundbreaking draft regulation that grants debit, credit, and prepaid cardholders the authority to select their desired card network. This regulation marks a potential revolution in the global credit card industry, challenging the prevailing practice where card network options are predetermined through agreements between issuers and networks. Promoting customer choice and flexibility The RBI's draft circular prohibits card issuers from entering into agreements that restrict them from accessing services of other card networks. The current arrangements between card networks and issuers, including banks and non-banking institutions, are deemed inadequate in promoting customer choice and availability. The proposed regulation aims to enhance flexibility and competition in the credit card market, allowing users to choose the card network that best suits their preferences and requirements. Under the new regulations, cardholders will have the flexibility to migrate to a different payment network while keeping their existing card accounts, balances, and credit history intact. This concept of card network portability enables consumers to transfer their card accounts from one network to another, similar to switching mobile service providers while retaining the same phone number. Operational challenges and increased costs While the draft regulation holds significant advantages for customers, such as decision-making authority and portability, banks may face operational challenges and increased costs. Banks will need to review existing agreements, establish new partnerships, adjust customer onboarding processes, provide additional training, and reevaluate customer profiling. The impact on the manufacturing process of banking cards is another factor that banks will need to evaluate in the coming months. With the proposed implementation date set for October 1, 2023, banks face a tight timeline of less than 90 days to implement the extensive organizational changes. Primary Beneficiaries The primary beneficiaries of this new regulation are customers, as card issuers will be obligated to offer more than one card network and provide the option for customers to choose their preferred network during card issuance or even afterward. This move also opens up the potential for innovative offerings by different network providers, offering broader advantages for customers in the future. In India, authorized card networks, including MasterCard, Visa, American Express Banking Corp, Diners Club International, and National Payments Corporation of India - RuPay, partner with banks and non-banking financial institutions for card issuance. Previously, banks had been exclusively tying up with a few dominant networks, limiting customer choice. The RBI's proposed regulation aims to eliminate such restrictions and promote a level playing field for all card networks. India's credit card market: A Snapshot The credit card market in India has been booming, with credit card outstanding reaching Rs 2 lakh crore, a year-on-year rise of 29.7 per cent. Banks have issued 8.65 crore credit cards as of April 2023, with monthly credit payments exceeding Rs one lakh crore. The surge in credit card usage reflects the growing purchasing power of the country. However, it is crucial to ensure responsible practices by credit card companies while issuing cards, considering the significant outstanding debt. RuPay: Striving for dominance RuPay, India's domestic card payment network, has been striving to gain a foothold in the credit card space, which is dominated by international networks like Visa and MasterCard. RuPay's dominance in the debit card market, capturing 65 per cent of the market share, contrasts with its minimal presence in the credit card space. The government has been promoting RuPay through initiatives such as linking credit cards to UPI and may consider further incentives to boost its adoption. The RBI's draft regulation is expected to significantly change the credit card landscape, providing customers with greater choices and fostering competition among card networks. Stakeholders have been invited to provide their comments on the proposal, with the potential mandate expected to come into effect in October. (With Inputs from Agencies)

Credit card network revolution: RBI grants Indian customers the power to choose

Governor of Reserve Bank of India Shaktikanta Das said on Monday (June 26) that the impact of the withdrawal of Rs 2,000 currency notes on the economy will be "very very marginal" as the notes accounted for only 10.8 per cent of the currency in circulation.

He described the withdrawal exercise as being part of the currency management operations of the Reserve Bank of India. He said he expected most of the withdrawn&nbsp;Rs 2,000 notes to be returned by September 30, which is the deadline to return the notes.

"As you know that Rs 2,000 notes were not commonly used in any transaction … We have found that it is hardly being used for carrying out transactions. Therefore, economic activity will not be impacted," he said as per Press Trust of India (PTI)

"As part of a clean note policy, he said, RBI has been conducting such exercise of withdrawal of currency notes from time to time and such exercise was undertaken in 2013-14, whereby the notes which were printed prior to 2005, were withdrawn from public circulation."

Asked if ₹2,000 notes will continue to be&nbsp;legal tender, Das said, “It will continue as legal tender. We will wait how many notes are coming. I cannot give a speculative answer about what will happen post-September 30.”&nbsp;

"Most of the notes are expected to come back," he said, adding “that is our expectation at this stage. We will see how many notes come back. And as we approach September 30, we will decide at that stage.”

<h2>No need to panic</h2>

Das said that there was enough time available for people to exchange and deposit the notes in bank accounts so there was no need to panic.&nbsp;

The governor explained that there were more than adequate notes available in the system.

“So there is adequate stock available and there is no reason to worry whatsoever. We have more than sufficient stocks,” he said.

He stressed that RBI was sensitive to difficulties possibly faced by Indians on long foreign visits or those who are living in other countries on work visas.

Also Read | <a href="https://www.wionews.com/india-news/indian-clock-tells-story-of-most-populous-nation-608958">Indian clock tells story of most populous nation</a>

“It will be our endeavour to address the difficulties of the people and to complete the entire process in a smooth manner,” he said.

To a question regarding black money coming back to the system, he said, there is a set procedure for deposits in your account or cash exchange.

“What we have said is that the existing requirements or the existing procedures have to be followed by the banks. We have not come out with an additional procedure. You must be aware that there’s an income tax rule if you deposit cash above Rs 50,000 then you have to produce your PAN. So existing rules will apply,” he said.

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&nbsp;

Governor of Reserve Bank of India Shaktikanta Das said on Monday (June 26) that the impact of the withdrawal of Rs 2,000 currency notes on the economy will be "very very marginal" as the notes accounted for only 10.

Governor of Reserve Bank of India Shaktikanta Das said on Monday (June 26) that the impact of the withdrawal of Rs 2,000 currency notes on the economy will be "very very marginal" as the notes accounted for only 10.8 per cent of the currency in circulation. He described the withdrawal exercise as being part of the currency management operations of the Reserve Bank of India. He said he expected most of the withdrawn Rs 2,000 notes to be returned by September 30, which is the deadline to return the notes. "As you know that Rs 2,000 notes were not commonly used in any transaction … We have found that it is hardly being used for carrying out transactions. Therefore, economic activity will not be impacted," he said as per Press Trust of India (PTI) "As part of a clean note policy, he said, RBI has been conducting such exercise of withdrawal of currency notes from time to time and such exercise was undertaken in 2013-14, whereby the notes which were printed prior to 2005, were withdrawn from public circulation." Asked if ₹2,000 notes will continue to be legal tender, Das said, “It will continue as legal tender. We will wait how many notes are coming. I cannot give a speculative answer about what will happen post-September 30.” "Most of the notes are expected to come back," he said, adding “that is our expectation at this stage. We will see how many notes come back. And as we approach September 30, we will decide at that stage.” No need to panic Das said that there was enough time available for people to exchange and deposit the notes in bank accounts so there was no need to panic. The governor explained that there were more than adequate notes available in the system. “So there is adequate stock available and there is no reason to worry whatsoever. We have more than sufficient stocks,” he said. He stressed that RBI was sensitive to difficulties possibly faced by Indians on long foreign visits or those who are living in other countries on work visas. Also Read | Indian clock tells story of most populous nation “It will be our endeavour to address the difficulties of the people and to complete the entire process in a smooth manner,” he said. To a question regarding black money coming back to the system, he said, there is a set procedure for deposits in your account or cash exchange. “What we have said is that the existing requirements or the existing procedures have to be followed by the banks. We have not come out with an additional procedure. You must be aware that there’s an income tax rule if you deposit cash above Rs 50,000 then you have to produce your PAN. So existing rules will apply,” he said. You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

'Very very marginal' impact on economy: RBI governor on Rs 2,000 note withdrawal

The Reserve Bank of India (RBI) has responded to media reports alleging a substantial amount of missing banknotes, as per a response to a Right to Information (RTI) query, and debunked all the claims, saying the interpretations drawn from replies to different units as too far fetched and grossly incorrect.&nbsp;

The RBI clarified that these reports are incorrect as they stem from a misinterpretation of information obtained from the currency printing presses under the RTI Act. The central bank reassured that all banknotes issued by the presses have been properly accounted for, dispelling any notion of unaccounted currency.

"The RBI has come across reports circulating in certain sections of the media alleging missing banknotes printed by the banknote printing presses. The RBI emphasises that these reports are not correct," the central bank said in a statement. 
 
“It may be noted that all banknotes supplied from printing presses to RBI are properly accounted for. It is further informed that there are robust systems in place for reconciliation of banknotes printed at the presses and supplied to RBI which include protocols to monitor production, storage and distribution of banknotes.”

RBI urged the public to rely on the information published by RBI from time to time in such matters.

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Clarification on Banknote <a href="https://t.co/PsATVk1hxw">pic.twitter.com/PsATVk1hxw</a>
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The RBI reportedly did not receive 1,760.65 million currency notes of ₹500 each, said media reports citing RTI activist Manoranjan Roy's supposed findings under India's Right to Information Act on Saturday. 
 
The value of notes, reported to be missing as per tManoranjan Roy was a staggering ₹88,032.5 crore (nearly $11 billion).&nbsp;

"The apex bank is indifferent to the harm caused to the Indian economy with such a huge mismatch in high denomination Indian currency notes printed in the mints and the total received in the RBI vaults. The missing 1,760.65 million pieces is no joke. It raises security concerns about our Indian economy and its stability," Roy was quoted as saying by the Free Press Journal.

<h2>What has happened, according to report?</h2>

It has been reported that the Reserve Bank of India's money-minting press in Maharashtra state's Nashik issued 8,810.65 million pieces of the newly designed ₹500 note. Of these, the RBI received only 7,260 million pieces, according to activist Manorajan Roy's RTI findings reported in the Free Press Journal.&nbsp;

The Report of the Currency Note Press, Nashik, shows&nbsp;the newly designed ₹500 currency notes were supplied to the Central bank but the RBI annual report does not mention receiving any ₹500 notes with the new design, in its Public Domain Annual Report on Currency Management.&nbsp;

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The information provided by the Currency Note Press, Nashik, mentions 1,662.000 million pieces of the newly designed Rs 500 note were supplied to the RBI in 2016-2017, Free Press Journal reported.

The report further adds that the Bharatiya Reserve Bank Note Mudran (P) Limited, Bengaluru, supplied 5,195.65 million pieces of ₹500 to the RBI and the Bank Note Press, Dewas, supplied 1,953.000 million pieces to the RBI in 2016-2017.

Also read |&nbsp;<a href="https://www.wionews.com/india-news/indian-supreme-court-to-examine-2016-demonetisation-decision-asks-for-affidavits-524831">India's Supreme Court to examine 2016 demonetisation decision, asks govt, RBI to file affidavits</a>

Of these, the RBI received only 7,260 pieces of the newly designed ₹500 note from all three printing presses.&nbsp;

There is reported to be a mismatch. A total of 8,810.65 million pieces of the newly designed ₹500 note were printed by the three units in all, but the RBI received only 7,260.000 pieces.

 
&nbsp;

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The Reserve Bank of India (RBI) has responded to media reports alleging a substantial amount of missing banknotes, as per a response to a Right to Information (RTI) query, and debunked all the claims, saying the interpretations drawn from replies to different units as too far fetched and grossly incorrect.

The Reserve Bank of India (RBI) has responded to media reports alleging a substantial amount of missing banknotes, as per a response to a Right to Information (RTI) query, and debunked all the claims, saying the interpretations drawn from replies to different units as too far fetched and grossly incorrect. The RBI clarified that these reports are incorrect as they stem from a misinterpretation of information obtained from the currency printing presses under the RTI Act. The central bank reassured that all banknotes issued by the presses have been properly accounted for, dispelling any notion of unaccounted currency. "The RBI has come across reports circulating in certain sections of the media alleging missing banknotes printed by the banknote printing presses. The RBI emphasises that these reports are not correct," the central bank said in a statement. “It may be noted that all banknotes supplied from printing presses to RBI are properly accounted for. It is further informed that there are robust systems in place for reconciliation of banknotes printed at the presses and supplied to RBI which include protocols to monitor production, storage and distribution of banknotes.” RBI urged the public to rely on the information published by RBI from time to time in such matters. Clarification on Banknote pic.twitter.com/PsATVk1hxw — ReserveBankOfIndia (@RBI) June 17, 2023 × The RBI reportedly did not receive 1,760.65 million currency notes of ₹500 each, said media reports citing RTI activist Manoranjan Roy's supposed findings under India's Right to Information Act on Saturday. The value of notes, reported to be missing as per tManoranjan Roy was a staggering ₹88,032.5 crore (nearly $11 billion). "The apex bank is indifferent to the harm caused to the Indian economy with such a huge mismatch in high denomination Indian currency notes printed in the mints and the total received in the RBI vaults. The missing 1,760.65 million pieces is no joke. It raises security concerns about our Indian economy and its stability," Roy was quoted as saying by the Free Press Journal. What has happened, according to report? It has been reported that the Reserve Bank of India's money-minting press in Maharashtra state's Nashik issued 8,810.65 million pieces of the newly designed ₹500 note. Of these, the RBI received only 7,260 million pieces, according to activist Manorajan Roy's RTI findings reported in the Free Press Journal. The Report of the Currency Note Press, Nashik, shows the newly designed ₹500 currency notes were supplied to the Central bank but the RBI annual report does not mention receiving any ₹500 notes with the new design, in its Public Domain Annual Report on Currency Management. Also watch | India's Supreme Court to examine 2016 demonetisation decision, asks govt, RBI to file affidavits × The information provided by the Currency Note Press, Nashik, mentions 1,662.000 million pieces of the newly designed Rs 500 note were supplied to the RBI in 2016-2017, Free Press Journal reported. The report further adds that the Bharatiya Reserve Bank Note Mudran (P) Limited, Bengaluru, supplied 5,195.65 million pieces of ₹500 to the RBI and the Bank Note Press, Dewas, supplied 1,953.000 million pieces to the RBI in 2016-2017. Also read | India's Supreme Court to examine 2016 demonetisation decision, asks govt, RBI to file affidavits Of these, the RBI received only 7,260 pieces of the newly designed ₹500 note from all three printing presses. There is reported to be a mismatch. A total of 8,810.65 million pieces of the newly designed ₹500 note were printed by the three units in all, but the RBI received only 7,260.000 pieces. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

India's RBI refutes allegations of unaccounted currency notes worth billions, calls reports incorrect

The Reserve Bank of India (RBI) has unanimously decided not to raise the Repo Rate as it expects retail inflation to decline further after it eased in April.

RBI’s Monetary Policy Committee— which is responsible for fixing the benchmark interest rate— announced its decision following a meeting on Thursday.&nbsp;

"The MPC decided unanimously to keep the policy change unchanged at 6.5 per cent," RBI Governor Shaktikanta Das said&nbsp;while announcing the second bi-monthly policy for 2023-24.

Repo Rate&nbsp;is the rate of interest at which commercial banks in India borrow money from the Reserve Bank of India.&nbsp;Changes in Repo Rate affect the flow of money in the market. It is&nbsp;a powerful arm of the Indian monetary policy that can regulate the country's money supply, inflation levels, and liquidity.

Das said that the MPC decided, by a majority of 5 out of 6, to continue with its stance of "withdrawal of accommodation". The MPC will take further decisions "promptly and appropriately as required",&nbsp;he added.

While keeping the interest rate intact, Das said that headline inflation remains above RBI's target of 4 per cent and expected it to remain so during the rest of the year.

The inflation projection has been slashed marginally to 5.1 per cent from an earlier estimate of 5.2 per cent for the current financial year. He said retail inflation has been below the upper band of 6 per cent for the last two years.

<h2>Indian economy expected to grow 6.7 per cent in 2024, says UN report</h2>

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The meeting took place against the backdrop of a decline in the Consumer Price-based (CPI) inflation—– the primary yardstick for monetary policymaking—as it reached an 18-month low of 4.7 per cent in April. The RBI governor had recently indicated that the CPI for May is expected to be lower than the April figures. The CPI for the last month will be disclosed on June 12.

Experts say that the RBI's decision reflects its commitment to attain twin objectives—keep inflation at bay while supporting business.

"Headline inflation remains high but it’s shaping towards RBI’s comfort zone. The RBI keeping the repo rate paused at 6.50 is certainly a big breather for existing and prospective borrowers who were waiting for rising interest rates to settle. Borrowers whose loan tenures increased due to back-to-back hikes may now consider making partial or full repayment of their loans as the repo rate remains unchanged,"&nbsp;Adhil Shetty, CEO,&nbsp;Bankbazaar.com—one of India's largest online financial service providers,&nbsp;told WION.

"RBI’s decision showcases the central bank’s prudent approach towards maintaining stability and fostering sustainable economic growth considering the global economic risks and uncertainties. By keeping interest rates steady, the RBI has exhibited its commitment to strike a delicate balance between addressing inflation concerns and supporting businesses."

<h2>RBI retains FY24 GDP growth forecast at 6.5%</h2>

Meanwhile, the RBI retained the GDP growth projection for the current fiscal year at 6.5 per cent, on the back of supportive domestic demand conditions.

In April, the central bank had marginally revised upwards the 2023-24 GDP growth projection to 6.5 per cent, from its earlier forecast of 6.4 per cent.

India's economy grew 6.1 per cent in the fourth quarter of 2022-23, pushing up the annual growth rate to 7.2 per cent, as against the 7 per cent anticipated earlier.

Das said the higher rabi crop production in 2022-23, the expected normal monsoon, and the sustained buoyancy in services should support private consumption and the overall economic activity in the current year.

The government's thrust on capital expenditure, moderation in commodity prices and robust credit growth are expected to nurture investment activity, said the Monetary Policy Statement, 2023-24.

Weak external demand, geo-economic fragmentation, and protracted geopolitical tensions, however, pose risks to the outlook, it added.

"Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.5 per cent with Q1 at 8 per cent, Q2 at 6.5 per cent, Q3 at 6 per cent, and Q4 at 5.7 per cent, with risks evenly balanced," the governor said.

<h2>Headline inflation projected at 5.1%</h2>

RBI&nbsp;Governor&nbsp;Shaktikanta Das&nbsp;said that CPI headline inflation is projected at 5.1 per cent for FY2023 after taking into account a normal monsoon in the country.&nbsp;

“All is well for Kharif crops. Uncertainiltuy however remain on special and temporal distribution of monsoon, and Al Nino. Taking into account all factors and assuming a normal monsoon, CPI headline inflation is projected at 5.1 per cent for 2023-24," Shaktikanta Das said.&nbsp;

He said that the Indian economy and financial sector come out as strong and resilient.&nbsp;“The domestic&nbsp;macroeconomic&nbsp;fundamentals are strengthening. The current account deficit is expected to have moderated and remain eminently manageable in 2023-24. The rupee remained stable since January this year and India’s&nbsp;foreign exchange&nbsp;reserves stood at $595.1 billion as on June 2," he added.&nbsp;

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The Reserve Bank of India (RBI) has unanimously decided not to raise the Repo Rate as it expects retail inflation to decline further after it eased in April. RBI’s Monetary Policy Committee— which is responsible for fixing the benchmark interest rate— announced its decision following a meeting on Thursday.

The Reserve Bank of India (RBI) has unanimously decided not to raise the Repo Rate as it expects retail inflation to decline further after it eased in April. RBI’s Monetary Policy Committee— which is responsible for fixing the benchmark interest rate— announced its decision following a meeting on Thursday. "The MPC decided unanimously to keep the policy change unchanged at 6.5 per cent," RBI Governor Shaktikanta Das said while announcing the second bi-monthly policy for 2023-24. Repo Rate is the rate of interest at which commercial banks in India borrow money from the Reserve Bank of India. Changes in Repo Rate affect the flow of money in the market. It is a powerful arm of the Indian monetary policy that can regulate the country's money supply, inflation levels, and liquidity. Das said that the MPC decided, by a majority of 5 out of 6, to continue with its stance of "withdrawal of accommodation". The MPC will take further decisions "promptly and appropriately as required", he added. While keeping the interest rate intact, Das said that headline inflation remains above RBI's target of 4 per cent and expected it to remain so during the rest of the year. The inflation projection has been slashed marginally to 5.1 per cent from an earlier estimate of 5.2 per cent for the current financial year. He said retail inflation has been below the upper band of 6 per cent for the last two years. Indian economy expected to grow 6.7 per cent in 2024, says UN report The meeting took place against the backdrop of a decline in the Consumer Price-based (CPI) inflation—– the primary yardstick for monetary policymaking—as it reached an 18-month low of 4.7 per cent in April. The RBI governor had recently indicated that the CPI for May is expected to be lower than the April figures. The CPI for the last month will be disclosed on June 12. Experts say that the RBI's decision reflects its commitment to attain twin objectives—keep inflation at bay while supporting business. "Headline inflation remains high but it’s shaping towards RBI’s comfort zone. The RBI keeping the repo rate paused at 6.50 is certainly a big breather for existing and prospective borrowers who were waiting for rising interest rates to settle. Borrowers whose loan tenures increased due to back-to-back hikes may now consider making partial or full repayment of their loans as the repo rate remains unchanged," Adhil Shetty, CEO, Bankbazaar.com—one of India's largest online financial service providers, told WION. "RBI’s decision showcases the central bank’s prudent approach towards maintaining stability and fostering sustainable economic growth considering the global economic risks and uncertainties. By keeping interest rates steady, the RBI has exhibited its commitment to strike a delicate balance between addressing inflation concerns and supporting businesses." RBI retains FY24 GDP growth forecast at 6.5% Meanwhile, the RBI retained the GDP growth projection for the current fiscal year at 6.5 per cent, on the back of supportive domestic demand conditions. In April, the central bank had marginally revised upwards the 2023-24 GDP growth projection to 6.5 per cent, from its earlier forecast of 6.4 per cent. India's economy grew 6.1 per cent in the fourth quarter of 2022-23, pushing up the annual growth rate to 7.2 per cent, as against the 7 per cent anticipated earlier. Das said the higher rabi crop production in 2022-23, the expected normal monsoon, and the sustained buoyancy in services should support private consumption and the overall economic activity in the current year. The government's thrust on capital expenditure, moderation in commodity prices and robust credit growth are expected to nurture investment activity, said the Monetary Policy Statement, 2023-24. Weak external demand, geo-economic fragmentation, and protracted geopolitical tensions, however, pose risks to the outlook, it added. "Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.5 per cent with Q1 at 8 per cent, Q2 at 6.5 per cent, Q3 at 6 per cent, and Q4 at 5.7 per cent, with risks evenly balanced," the governor said. Headline inflation projected at 5.1% RBI Governor Shaktikanta Das said that CPI headline inflation is projected at 5.1 per cent for FY2023 after taking into account a normal monsoon in the country. “All is well for Kharif crops. Uncertainiltuy however remain on special and temporal distribution of monsoon, and Al Nino. Taking into account all factors and assuming a normal monsoon, CPI headline inflation is projected at 5.1 per cent for 2023-24," Shaktikanta Das said. He said that the Indian economy and financial sector come out as strong and resilient. “The domestic macroeconomic fundamentals are strengthening. The current account deficit is expected to have moderated and remain eminently manageable in 2023-24. The rupee remained stable since January this year and India’s foreign exchange reserves stood at $595.1 billion as on June 2," he added. WATCH WION LIVE HERE

Reserve Bank of India keeps Repo Rate unchanged at 6.5%

The Reserve Bank of India removed 2,000 rupee notes from circulation on Friday. Until September 30, 2023, the central bank has invited banks to offer 2,000 note deposit and exchange services.

Deposits or Exchange? Bank sends mixed signals

The withdrawal of INR 2,000 currency notes from circulation may actually boost India’s economy temporarily. As per economists, consumers in India might use Rs 2,000 notes to&nbsp;snap up costly products, such as jewellery and real estate, in order to quickly get rid of them.

Watch:&nbsp;Reserve Bank of India to withdraw ₹2000 notes from circulation

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People might also resort to buying other household items like air conditioners and refrigerators. Ankita Pathak, an economist at DSP Investment Managers, was quoted as saying by Hindustan Times, “It is expected to help growth a bit because consumption is expected to go up.”

<h2>Panic buying already visible among customers</h2>

Earlier, The Times of India reported that the decision on&nbsp;Rs 2,000 currency notes has prompted panic buying among Indian customers. People even complained that store owners were quoting higher prices for gold when paid with Rs 2,000 notes. However, it must be noted that high-value cash transactions will attract the attention of tax authorities as pan card details are mandatorily registered with the sellers.

<a href="https://www.wionews.com/business-economy/what-rbi-will-do-with-your-out-of-use-rs2000-currency-note-595116">Also Read |&nbsp;What RBI will do with your out-of-use ₹2000 currency note</a>

Gnansekharan Thiagrajan, director at Commtrendz Research, said, “There is some knee-jerk reaction here. When cash is involved, one of the things you use it for is to buy gold. Definitely, it will push up demand for now and it may make up for the lost demand during Akshay Tritiya when prices reached a peak. It will be a gradual increase in demand as there is time to exchange notes."

<h2>People also rushing to petrol pumps</h2>

The usage of Rs 2,000 notes for cash purchases of fuel at petrol pumps has significantly increased to nearly 90 per cent of daily sales. This surge occurred as buyers hurried to utilise the withdrawn currency notes.

Prior to the unexpected announcement of the withdrawal of Rs 2,000 notes, cash sales at petrol pumps accounted for only 10 per cent. However, after the announcement, customers began using the withdrawn note for smaller purchases of Rs 100 or Rs 200, anticipating that petrol pumps would provide change.

<h2>10.8 per cent of notes removed from circulation</h2>

The Reserve Bank of India (RBI) has announced that citizens have until September 30 to deposit or exchange Rs 2,000 notes as part of a "clean note policy." The decision aims to manage the country's currency effectively. RBI Governor Shaktikanta Das reiterated this stance, stating that there has always been reluctance in accepting Rs 2,000 rupee notes, which may have increased further following the notification.

This move will result in approximately 10.8 per cent of the notes being taken out of circulation. It is worth noting that this measure is different from the previous demonetisation exercise, which removed 86 per cent of the currency from the system.

<h2>Surge expected in conspicuous spending</h2>

Experts also noted that people’s reluctance to disclose their cash holdings may lead to conspicuous spending in the coming days. The decision of banning Rs 2,000 notes is also expected to improve liquidity in the country.&nbsp;

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The withdrawal of INR 2,000 currency notes from circulation may actually boost India’s economy temporarily. As per economists, consumers in India might use Rs 2,000 notes to snap up costly products, such as jewellery and real estate, in order to quickly get rid of them.

The withdrawal of INR 2,000 currency notes from circulation may actually boost India’s economy temporarily. As per economists, consumers in India might use Rs 2,000 notes to snap up costly products, such as jewellery and real estate, in order to quickly get rid of them. Watch: Reserve Bank of India to withdraw ₹2000 notes from circulation × People might also resort to buying other household items like air conditioners and refrigerators. Ankita Pathak, an economist at DSP Investment Managers, was quoted as saying by Hindustan Times, “It is expected to help growth a bit because consumption is expected to go up.” Panic buying already visible among customers Earlier, The Times of India reported that the decision on Rs 2,000 currency notes has prompted panic buying among Indian customers. People even complained that store owners were quoting higher prices for gold when paid with Rs 2,000 notes. However, it must be noted that high-value cash transactions will attract the attention of tax authorities as pan card details are mandatorily registered with the sellers. Also Read | What RBI will do with your out-of-use ₹2000 currency note Gnansekharan Thiagrajan, director at Commtrendz Research, said, “There is some knee-jerk reaction here. When cash is involved, one of the things you use it for is to buy gold. Definitely, it will push up demand for now and it may make up for the lost demand during Akshay Tritiya when prices reached a peak. It will be a gradual increase in demand as there is time to exchange notes." People also rushing to petrol pumps The usage of Rs 2,000 notes for cash purchases of fuel at petrol pumps has significantly increased to nearly 90 per cent of daily sales. This surge occurred as buyers hurried to utilise the withdrawn currency notes. Prior to the unexpected announcement of the withdrawal of Rs 2,000 notes, cash sales at petrol pumps accounted for only 10 per cent. However, after the announcement, customers began using the withdrawn note for smaller purchases of Rs 100 or Rs 200, anticipating that petrol pumps would provide change. 10.8 per cent of notes removed from circulation The Reserve Bank of India (RBI) has announced that citizens have until September 30 to deposit or exchange Rs 2,000 notes as part of a "clean note policy." The decision aims to manage the country's currency effectively. RBI Governor Shaktikanta Das reiterated this stance, stating that there has always been reluctance in accepting Rs 2,000 rupee notes, which may have increased further following the notification. This move will result in approximately 10.8 per cent of the notes being taken out of circulation. It is worth noting that this measure is different from the previous demonetisation exercise, which removed 86 per cent of the currency from the system. Surge expected in conspicuous spending Experts also noted that people’s reluctance to disclose their cash holdings may lead to conspicuous spending in the coming days. The decision of banning Rs 2,000 notes is also expected to improve liquidity in the country. WATCH WION LIVE HERE ×

Indians rush to jewellery stores, petrol pumps after Rs 2,000 note withdrawal

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