Thursday, April 3, 2025

RBI retains repo rate at 6.5% for sixth time in a row

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Shillong, February 8: Not belying the expectations of senior economists, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has retained the repo rate at 6.50 per cent for sixth time in a row.

The repo rate is the rate at which the RBI lends to the commercial banks.

The RBI has also decided that banks should disclose to retail and MSME borrowers the all inclusive rate chart — basic interest rate plus other charges like processing fee etc — as Key Facts Statement.

Announcing the decisions of the MPC after its three-day deliberations, RBI Governor Shaktikanta Das said on Thursday that the committee decided to keep the repo rate at 6.5 per cent.

Consequently, the standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.

The MPC also decided not to change its stance from ‘withdrawal of accomodation’ as the inflation continues to be above the target rate of 4 per cent and the incomplete transmission of revised repo rates.

Five of the six MPC members voted in favour of retaining the repo rate while Prof. Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points.

Varma also voted against the continued stance of `withdrawal of accomadation’ and wanted stance to change to `neutral’.

These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth, Das said.

Das said taking into account the economic factors, the MPC has predicted GDP growth at 7 per cent and the inflation rate at 4.5 per cent in FY25 assuming normal monsoon.

The MPC met on February 6-8.

According to the RBI Governor, with customer centricity as its emphasis, the central bank has now decided to extend the Key Facts Statement facility to retail and MSME borrowers.

Das said apart from the interest rate on loans, there are additional charges paid by borrowers like processing fee and others.

The RBI had earlier mandated banks for certain classes of borrowers an all inclusive rate chart as Key Facts Statement.

This facility will now be extended to retail and MSME borrowers. The banks will be given time to implement this, Das said.

The next meeting of the MPC is scheduled during April 3 to 5, 2024. (IANS)

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