RBI Action on Inflation: On one hand, the general public is troubled by rising inflation, on the other hand, it is also causing problems for the Reserve Bank of India, the country’s top bank. Monetary Policy Committee (MPC) has emphasized on keeping an eye on food inflation. Along with this, all six members including MD Patra, Shashank Bhide, Ashima Goyal, Jayant R Verma and Rajeev Ranjan had voted in favor of keeping status quo on the policy rate. After this, experts estimate that in the monetary review meeting of the Reserve Bank of India at the beginning of next month, a decision can be taken to keep the policy rate unchanged once again. Meanwhile, the US central bank Federal Reserve has decided to maintain a strict stance for some more time. This is also likely to impact the policy rates to be decided next month.
Repo rate was increased in February
The Reserve Bank had increased the repo rate to 6.5 percent on February 8, 2023 and since then it has kept the rates at the same level in view of some global factors including extremely high retail inflation and high crude oil prices in the international market. The meeting of the six-member MPC chaired by the RBI Governor is proposed on October 4-6. The last meeting of MPC was held in August. Madan Sabnavis, Chief Economist of Bank of Baroda, said that it is expected that RBI will not make any change in the interest rate this time because inflation still remains high and the liquidity situation is tight. If RBI’s estimate on inflation is considered correct, then it will remain more than five percent in the third quarter also. In such a situation, there will be no change in the repo rate in the current calendar year 2023 and possibly even in the fourth quarter.
Uncertainty regarding Kharif crops
Economist Madan Sabnavis said that there is uncertainty regarding Kharif crops, especially pulses. However, consumer price index (CPI) based inflation has declined slightly to 6.83 percent in August. In July it was 7.44 percent. However, it is still above the Reserve Bank’s satisfactory level of six percent. The government has given the responsibility to RBI to keep inflation at four percent with a variation of two percent. Chief Economist of ICRA Limited, Aditi Nair said that consumer price index based inflation is expected to decline to 5.3-5.5 percent in September, 2023. In this, the average price of tomato was halved. It was beneficial. Nair said that ICRA feels that the MPC will not make any changes in the October 2023 policy. The Reserve Bank has estimated retail inflation to be 5.4 percent for 2023-24. It is estimated to be 6.2 percent in the second quarter of the current financial year, 5.7 percent in the third quarter and 5.2 percent in the fourth quarter. Inflation is expected to be 5.2 percent in the first quarter of the next financial year.
Banks should focus on customer centric approach: RBI
Reserve Bank of India Deputy Governor Swaminathan J on Thursday asked the top management of banks and other financial institutions to focus on a customer-centric approach to strengthen people’s trust in the country’s banking system. Swaminathan held a meeting here with heads of customer service committees on the boards of major banks, managing directors, executive directors in-charge of customer service areas and key nodal officers. The Reserve Bank said in a statement that the discussion during the meeting focused on further improving customer services. This includes prompt resolution of complaints, streamlining the complaint handling system, improving customer experiences, use of technology to prevent fraud, greater awareness to further improve customer service and the need to create responsible policies. Swaminathan said in his address that the role of customer service is important in increasing trust in the financial system. He asked the top management and the Board of Directors Customer Service Committees to focus on developing a consumer centric approach to enhance customer confidence in the banking system.
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