New Delhi, February 09, 2024.
The Reserve Bank of India (RBI) Governor delivered a well-balanced policy, aligning largely with the market expectations. RBI’s GDP growth projection of 7% for FY25 is quite bullish and reflects the Central Bank’s confidence in sustenance of the growth trajectory. While overall inflation is projected at average of 4.5% for FY25, it is important to note that the disinflationary trend is not being sustained, with marginal increase in inflation in the third and fourth quarter of FY25. The RBI has maintained the stance as ‘withdrawal of accommodation’ while reiterating its objective of achieving 4% inflation target on a durable basis and the need for further transmission of policy rate cuts by the banks.
Going forward, we feel that RBI would remain cautious given the risk posed by high food inflation. Healthy economic growth gives room to the Central Bank to maintain status quo for some more time. However, in the second half of the year, as domestic inflationary concerns recede and the US Fed starts cutting rates, we can expect a shallow rate cut by RBI. On the liquidity front, RBI will continue to intervene through appropriate tools as required.
“Shanti Ekambaram, Whole-time Director Kotak Mahindra Bank Ltd” Said“ In line with the wider expectations, the MPC has maintained the status quo in both the policy rates and the stance of “ withdrawal of accommodation”. Though the CPI is pegged at 5.4% for FY’24, the expectation of inflation at 4.5% for FY’25 comes from the complete transmission of the 250 bps hikes so far, percolating fully into the economy.
The central bank has shown its nimbleness and readiness to tackle the surplus liquidity and reach the long-term objective of inflation at 4% levels on a durable basis. GDP growth is estimated at 7.3% for FY’24 – making it the third consecutive year of > 7% growth. Food remains the major risk element. Next year’s projection of 7% growth also shows the robust growth potential in India, driven by growing physical infrastructure, continued digitization and rising capex besides a steady urban consumption.
Fiscal consolidation cues in the Budget and the financial stability of the economy as seen by external and internal indicators are signs that the central bank may much comfort in. The overall domestic economic outlook exudes immense optimism as India continues to remain the bright spot in the world. ”
We laud the RBI’s continuous focus on boosting digital trust, says Signzy CEO
RBI MPC Meeting 2024 Live: Applauding the RBI’s continuous focus on enhancing digital trust by implementing principle-based framework for authentication for digital payments security, CEO and Co-founder at Signzy, Ankit Ratan said, “ The rising financial cyber crimes are eroding the digital trust within the ecosystem, with approximately 1.1 million cases of such frauds had been registered in 2023 that involves an amount of ₹7,488.6 crore.”
“By adopting a principle-based framework for authentication, businesses not only curb the financial frauds but will also be able to provide a secure environment for its customers and protect their data. The RBI also emphasised on streamline the process of on-boarding of Aadhaar Enabled Payment System (AePS) service providers and introduce additional fraud risk management measures. We believe that compliance transcends mere checkbox exercises; it serves as a critical tool in ensuring the safety of customer data and protecting the reputation of businesses,” Ratan added.
