Reserve Bank of India keeps repo rate unchanged at 6.5%

The Reserve Bank of India's Monetary Policy Committee (MPC), led by Governor Shaktikanta Das on Thursday, has decided to maintain the repo rate at 6.5% for the sixth consecutive session,forecasts FY25 GDP growth at 7%. Inflation moderated, liquidity remains surplus. Rupee stable, forex reserves $622.5 billion.This decision comes amidst a backdrop of global economic uncertainties and domestic inflationary pressures.The MPC also decided with majority of 5:1 to remain focused on withdrawal of accommodation keeping the stance unchanged.The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.
A persistently high inflation has been a major point of worry for the policymakers. Soaring prices, particularly that of essential food items, have been hurting poor households affecting their ability to purchase goods and services.This is the sixth consecutive pause in the last year. Since the April monetary policy in 2023, the RBI has kept the repo rate unchanged at 6.5 percent, after raising it by 250 basis points (bps) in May 2022. This was after inflation showed signs of moderating. One basis point is one-hundredth of a percentage point.
The RBI has extended the requirement of a key fact statement to all retail and MSME loans in a bid to enhance transparency. A Key Fact Statement is a document that clearly explains lending terms. It has key information regarding a loan agreement, including the all-in-cost of the loan, in a simple and easy-to-understand format.To enhance transparency in the disclosure of such information, the Reserve Bank had mandated certain categories of lenders to provide the borrower a Key Fact Statement (KFS) containing essential information such as the all-inclusive annual percentage rate (APR) and recovery and grievance redress mechanisms. "The requirement of KFS is now being extended to cover all retail and MSME loans. This measure will lead to enhanced transparency in lending and enable customers in making informed decisions," Das said.

(Ira Singh, Asstt Editor, Gandhinagar)