Mumbai: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has kept repo rate unchanged at 5.25 per cent. Consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate remains at 5.50 per cent.
“After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25 per cent. Consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate remains at 5.50 per cent. The MPC also decided to continue with the neutral stance” said RBI Governor Sanjay Malhotra.
Growth
The RBI projected gross domestic product (GDP) growth for FY27 to be at 6.9 percent, lower than the central bank’s FY26 projection of 7.4 percent.
Inflation
CPI inflation for 2026-27 is projected at 4.6 per cent with Q1 at 4.0 per cent; Q2 at 4.4 per cent; Q3 at 5.2 per cent; and Q4 at 4.7 per cent. Core inflation is projected at 4.4 per cent. Excluding precious metals, core inflation is even lower indicating that underlying inflation pressures are expected to remain contained. The risks are on the upside.
Promoting ease of doing business
There are three measures proposed to promote ease of doing business. First, to facilitate better utilisation of Bank Board’s time, after a comprehensive review of all our extant instructions, we propose to revise and rationalise the matters requiring its attention. Second, you would recall that we had recently undertaken a detailed exercise, to consolidate over 9000 regulatory instructions into 238 Master Directions. A similar consolidation exercise has now been completed for all our supervisory instructions. Third, to facilitate ease of doing business by MSMEs, we propose to dispense with the requirement of due diligence while onboarding them on TReDS platforms.
Supporting Capital Adequacy
There are two measures regarding capital adequacy of banks. First, it is proposed to remove the condition regarding NPA provisioning for inclusion of quarterly profits in CRAR computation. Second, in view of the developments in prudential framework over the years, it is proposed to dispense with the requirement to maintain an Investment Fluctuation Reserve (IFR) as an additional buffer to hedge against depreciation in the value of investments.
Development of Money Market
For further development of the term money market, RBI has decided to permit certain additional categories of non-bank entities in this market segment. At present, only banks and standalone primary dealers (SPDs) are eligible to participate in this market. RBI has also decised to enhance the borrowing limit of SPDs in the term money market.