RBI Repo Rate Update | RBI Monetary Policy Meeting 2024 Udpate – Shaktikanta Das | Loan is not expensive, nor EMI will increase: RBI kept the repo rate at 6.5%, but there is a possibility of inflation increasing; This may reduce economic growth

The repo rate was 4.0% in May 2022, now it is 6.5%. That means it has increased by 2.5% in 31 months.

Your existing loan will not become expensive, nor will your EMI increase. This is because the Reserve Bank of India (RBI) has maintained the interest rates at 6.5%. The Central Bank has not changed the rates for the 11th consecutive time. The last time the interest rate was increased by 0.25% to 6.5% was in February 2023.

Reserve Bank Governor Shaktikanta Das gave information about the decisions taken in the Monetary Policy Committee (MPC) meeting on Friday. This meeting takes place every two months. RBI has also expressed the fear of rising inflation, which may have a negative impact on economic growth. That is why the GDP growth estimate for the next financial year has been reduced from 7.2% to 6.6%.

What did the common man get in the monetary policy meeting of RBI?

1. For Loan Customers: RBI has kept the interest rates unchanged at 6.5%. That means loans will not be expensive and EMI of the existing loan will also not increase. RBI last increased rates by 0.25% to 6.5% in February 2023.

2. For farmers: It has been decided to increase the limit of collateral free agricultural loan i.e. loan without mortgaging any goods from Rs 1.6 lakh per borrower to Rs 2 lakh per borrower. This change has been made keeping in mind the increase in agricultural input costs and overall inflation. It was last changed in 2019.

3. For UPI customers: Now small finance banks have also been allowed to provide the facility of payment on UPI through credit line i.e. even if there is no money in the account. It started in September 2023. Then it was made available through scheduled commercial banks like SBI, HDFC, ICICI and other such big banks.

RBI says that with the latest decision more people will be able to use the facility of financial transactions.

4. For Banks: The committee has reduced the mandatory cash reserve ratio (CRR) for banks from 4.50% to 4%. This will increase cash with banks, which they can use to distribute loans.

Banks have to keep a minimum percentage of their deposits as reserves with the RBI. This is called CRR. RBI uses it to control money flow in the economy. Due to this, liquidity i.e. availability of cash in the market is controlled.

5. On Economic Growth: The RBI Governor expressed hope that the country’s economy will remain better, but also mentioned some challenges, which may impact it:

Understand RBI’s estimates regarding economic growth and inflation through graphics…

RBI increased interest rates by 1.10% 5 times since 2020

The Reserve Bank of India (RBI) cut interest rates by 0.40% twice during Corona (27 March 2020 to 9 October 2020). After this, in the next 10 meetings, the Central Bank increased interest rates 5 times, made no change four times and once cut it by 0.50% in August 2022. Before Covid, the repo rate was at 5.15% on 6 February 2020.

4 out of 6 members of the committee are not in favor of change in interest rates.

There are 6 members in MPC, out of which 3 are RBI officials and the remaining 3 are members nominated by the government. RBI Governor Shaktikanta Das, Deputy Governor Michael Patra and Executive Director Rajeev Ranjan are already included. The government has appointed Ram Singh, Saugata Bhattacharya and Nagesh Kumar as external members in the committee on October 1.

RBI Governor said that 4 out of 6 members of the Monetary Policy Committee were not in favor of change in interest rates. Due to no change, the Standing Deposit Facility i.e. SDF rate remains at 6.25% and the Marginal Standing Facility i.e. MSF rate and Bank Rate remain at 6.75%.

Policy rate is a powerful tool to fight inflation

Any central bank has a powerful tool to fight inflation in the form of the policy rate. When inflation is very high, the Central Bank tries to reduce money flow in the economy by increasing the policy rate.

If the policy rate is high then the loan that banks get from the Central Bank will be expensive. In return, banks make loans costlier for their customers. This reduces money flow in the economy. If money flow decreases, demand decreases and inflation decreases.

Similarly, when the economy goes through a bad phase, there is a need to increase money flow for recovery. In such a situation, the Central Bank reduces the policy rate. Due to this, the loan received by the banks from the Central Bank becomes cheaper and the customers also get the loan at a cheaper rate.

RBI trending on Google

RBI Governor Shaktikanta Das informed about the decisions taken in the Monetary Policy Committee (MPC) meeting on Friday. After this news, RBI is being searched continuously on Google. If we also look at the Google trends of the last 30 days, it is clear that the graph of searching for RBI has increased.

Source- GOOGLE TRENDS

Also read…

₹1 lakh crore in inactive bank accounts in the country: Such accounts are also promoting fraud, RBI is preparing to curb it.

The Reserve Bank of India (RBI) has expressed concern over the increasing freeze and inoperative accounts in banks. Banks have been instructed to immediately take all possible necessary steps to reduce such accounts. Banks have been asked to adopt simple processes like mobile or internet banking, non-home branch, video customer identification for KYC of such accounts. Read the full news…

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