Today’s monetary policy review was largely a non-event. In line with our expectation, the MPC kept rates unchanged and vowed to keep the stance accommodative at least during the current financial year and into the next financial year. It noted that inflation is likely to remain elevated despite some possible softening during winter months. Accordingly, it upped its inflation forecast to 6.8% in Q3 and 5.8% in Q4FY21. Given the positive growth impulses, the committee also upped its growth forecast to -7.5% during FY21 from -9.5% in the Oct review. Given the expected inflation and growth trajectory, we believe the committee may stay put on rates through 2021.
Statement by Mr. Dilip Asbe – MD & CEO, NPCI on RBI announcement to increase limits for contactless card transactions and e-mandates for recurring transactions through cards and UPI
This is a welcome step by RBI to increase transactions and e-mandate limit. The increased limit will also help to boost the average value of transaction and push the adoption of digital payments. This step re-affirms the commitment of the country to become a less-cash economy.
The announcement will help RuPay cardholders to make secured contactless transactions of upto Rs. 5000 on the go thereby facilitating them with hassle free transaction experience. Similarly, this will be a major boost to the users of recently launched UPI AutoPay functionality for the customers to execute their high ticket recurring payments like utility bills, investments, two-wheeler EMIs, consumer durable EMIs etc. seamlessly. The move will also help customers to on-board into BHIM UPI for performing easy and convenient P2P and P2M transactions.
NPCI continues to play a pivotal role in driving the digital India mission through constant innovation, spreading awareness and deploying robust technology and infrastructure for seamless, secure and convenient payment experience.
Quote by Mr. Dinesh Kumar Khara, Chairman, SBI:
“The RBI policy of maintaining the status quo was expected but the continued forward guidance of an extended accommodative stance will continue to serve the markets well. The upward revision of the FY 21 GDP growth rate to -7.5 percent emphasizes that the worst is behind us though we must remain watchful. The central bank announcement of the extension of on-tap TLTRO to stressed sectors is a perfect example of coordinated monetary and fiscal policy coordination, a hallmark of the current pandemic. Allowing the RRBs to access the liquidity adjustment facility, will help RRBs to efficiently deploy and diversify their surplus funds and enlarge the reverse repo window. The move towards the strengthening of supervision of financial entities will right-size the three lines of defense in pursuit of an effective risk management framework. Measures such as digital payments supervision, deepening financial markets, and ensuring ease of doing business for export transactions are useful steps.”
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