India News Get -BusinessRBI Repo Rate Update | RBI Monetary Policy Meeting 2024, Shaktikanta Das Update
Your existing loan will not become expensive and your EMI will not increase. Indeed, the Reserve Bank of India (RBI) has kept interest rates at 6.5%. The Central Bank has not changed its rates for the 11th consecutive time. The last time the interest rate was increased from 0.25% to 6.5% was in February 2023.
RBI Governor Shaktikanta Das on Friday informed about the decisions taken at the Monetary Policy Committee (MPC) meeting. This meeting takes place every two months.
The MPC has 6 members, of which 3 are RBI officials and the remaining 3 are government appointed members. Already included are RBI Governor Shaktikanta Das, Deputy Governor Michael Patra and Executive Director Rajeev Ranjan. The government appointed Ram Singh, Saugata Bhattacharya and Nagesh Kumar as external members of the committee on October 1.
Four out of six committee members do not support changing interest rates.
The RBI governor said 4 out of 6 members of the monetary policy committee were not in favor of changing interest rates. Due to no change, the Standing Deposit Facility i.e. MSF Rate remains at 6.25% and the Marginal Standing Facility i.e. MSF Rate and MSF Rate discount, remain at 6.75%.
The Reserve Bank has increased interest rates by 1.10% 5 times since 2020 The Reserve Bank of India (RBI) has reduced interest rates by 0.40% twice during Corona (from March 27, 2020 to October 9, 2020). After that, in the next 10 meetings, the Central Bank increased interest rates five times, made no changes four times and reduced them once by 0.50% in August 2022. Before Covid , the repo rate was at 5.15% on February 6, 2020.
The cash reserve rate decreased by 0.50%
The committee reduced the CRR, i.e. cash reserve ratio, from 4.50% to 4%. Banks are required to keep a minimum percentage of their deposits as reserves with the central bank. The central bank uses it to control the money supply in the economy. This helps manage inflation and control liquidity. The limit for unsecured agricultural loans was last revised in 2019. Considering the increasing costs of agricultural inputs and overall inflation, it was decided to increase the loan limit from Rs 1, 6 lakh per borrower to Rs 2 lakh per borrower. The credit line on UPI was launched in September 2023 and will be. Scheduled commercial Was made available through banks. Now, Small Finance Bank has also received permission to provide credit line through UPI. This will strengthen financial inclusion. To prevent and reduce digital fraud, the Reserve Bank has developed an AI-based mulehunter.ai model.
Inflation estimate for FY25 increased to 4.8% from 4.5%
BeforeNowQ3FY254.8%5.7%Q4FY254.2%4.5%Q1FY264.3%
4.6%
T2FY26-4%
The key rate is a powerful tool to fight inflation Every central bank has a powerful tool to fight inflation: the key rate. When inflation is very high, the central bank attempts to reduce the flow of money in the economy by increasing the policy rate.
If the policy rate is high, the loan that banks get from the Central Bank will be expensive. In exchange, banks make loans more expensive for their customers. This reduces the flow of money in the economy. If money flow decreases, demand decreases and inflation decreases.
Similarly, when the economy is going through a bad phase, it is necessary to increase monetary flows to revive the economy. In such a situation, the Central Bank reduces the key 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.
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