What does the announcement regarding RBI Monetary Policy, Paytm and Offline eRupee Transactions mean?

The Reserve Bank of India (RBI) has maintained the policy repo rate at 6.5 percent for the sixth consecutive time. This means that your loan EMI is not going to increase. Along with this, RBI has estimated that the growth rate of GDP for the next financial year 2024-25 may be seven percent. RBI also estimates that inflation in the next financial year 2024-25 will be 4.5 percent. All these estimates show that the country’s economy is strong. The country is moving ahead on the path of growth and inflation is expected to remain under control. RBI has also made a big announcement that it will now start ‘offline’ transactions of e-rupee.

RBI statement on Paytm issue

Besides, RBI has also given major information on the issue of Paytm. RBI Governor Shaktikanta Das has also said without naming Paytm that if everything was complied with then why would the central bank take action against a regulated entity. RBI Governor Shaktikanta Das also said that there is no need to worry about the system regarding Paytm issue, we are only talking about the payments bank. Das said that our emphasis is always on bilateral activities with entities falling under the regulatory purview of RBI, our focus is on encouraging the entity to take the right steps. RBI Governor said that when banks and NBFCs do not take effective steps then we impose restrictions related to business. Das said that being a responsible regulator, we take steps keeping in mind the stability at the system level or the protection of the interests of depositors or customers. RBI Governor said that RBI will issue FAQs (Frequently Asked Questions) next week to address the concerns of the people regarding the action taken regarding Paytm. Whereas RBI Deputy Governor Swaminathan J. It also said that action was taken against Paytm for “persistent non-compliance” and it was given adequate time to take corrective action.

If we look at the main points of the bi-monthly monetary policy review announced by Reserve Bank of India Governor Shaktikanta Das, they are as follows-

* Policy rate or repo rate remains at 6.5 percent.

* The growth rate of gross domestic product (GDP) for the financial year 2024-25 is estimated to be seven percent, which is lower than the estimate of 7.3 percent for the current financial year.

* Retail inflation will average 5.4 percent in the current financial year. It will come down to 4.5 percent in 2024-25.

* Consumers have not yet fully benefited from the cut in interest rates.

* The current economic momentum will continue in the next financial year also.

* Improvement in Rabi sowing, sustained profitability in manufacturing sector, strong services to support economic activity in 2024-25.

* Investment cycle picking up pace, signs of improvement in private sector capital expenditure.

* The Indian economy is progressing confidently on a strong, sustained growth path.

* Government remains on fiscal consolidation path; Domestic economic activities strong.

* Uncertainty over food prices continues to weigh on core inflation.

* Rising geopolitical tensions are impacting supply chains, putting pressure on commodity prices.

* Foreign exchange reserves US$622.5 billion; Satisfactory to meet foreign obligations.

* The domestic financial system remains strong with healthy ‘books’.

* Regulated entities should give top priority to compliance, consumer interest protection.

* RBI will introduce an offline functionality in ‘CBDC-Retail’ for transactions in areas with poor or limited internet connectivity.

* The exchange rate of the Indian rupee remained quite stable in the current financial year.

* The next meeting of the Monetary Policy Committee (MPC) will be held from April 3 to 5.

Now let’s talk about e-rupee

The Reserve Bank of India has announced the launch of ‘offline’ transactions in the Central Bank Digital Currency (CBDC) pilot project. This means that users of the digital rupee will be able to transact even in areas with limited internet connection. While announcing the bi-monthly monetary policy on Thursday, Reserve Bank of India Governor Shaktikanta Das said that program-based additional use will be included in it as a pilot project. Let us remind you that RBI had launched the retail CBDC pilot in December 2022. It had achieved the target of 10 lakh transactions in a day in December, 2023. It is noteworthy that other payment platforms, especially the hugely popular Unified Payment Interface (UPI), already have the offline facility. Shaktikanta Das said, “It is proposed to introduce an offline facility in CBDC-Retail to enable transactions in areas with poor or limited internet connectivity.” And several ‘offline’ solutions will be tested in urban locations.

Shakti Kant Das said that Abhi enables person to person (P2P) and person to merchant (P2M) transactions using digital rupee wallets provided by banks. He said that now work will be done to enable it offline on a program basis. He said that the program based capability will enable users like government agencies to ensure payment for defined benefits. Das said companies will also be able to incur program-based expenses like business travel for their employees. Additional features such as validity period or geographical area within which the CDBC can be used can also be ‘programmed’, he said.

Banks directed to provide ‘key fact statement’ to retail customers, MSMEs taking loans

The Reserve Bank of India (RBI) on Thursday made it mandatory for banks to provide ‘Key Fact Statement’ (KFS) to borrowers, including interest and other terms, for all retail and MSME (Micro, Small and Medium Enterprises) loans. Decided on. Presently KFS is mandatory in respect of loans extended by commercial banks to individual borrowers, digital loans by RBI-regulated entities (REs) and micro finance loans. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the central bank has recently announced a number of measures to promote greater transparency and disclosure by REs in pricing of loans and other charges levied on customers. One such measure is to require lenders to provide their borrowers with a KFS containing key information regarding the loan agreement in a simple and easy to understand format. “It has been decided to make it mandatory for all REs to provide KFS to borrowers for all retail and MSME loans,” the Governor said. Das said important information about the terms of the loan agreement including all-inclusive interest cost. Providing this will greatly help the borrowers in making an informed decision. RBI also announced an important step regarding hedging of gold price risk in the over-the-counter (OTC) market at the International Financial Services Center (IFSC), GIFT City, Gandhinagar. To hedge their exposure to gold price, resident entities were allowed access to IFSC recognized exchanges in December, 2022. Das said this decision has been taken to avoid fluctuations in the price of gold in the OTC segment in IFSC. The Central Bank will issue related instructions separately.

Meanwhile, RBI also announced a review of the regulatory framework for electronic trading platforms (ETPs). Governor Das said that over the last few years, there has been increased integration of the ‘onshore forex’ market with the ‘offshore’ market, significant evolution in the technology landscape and increased product diversity. Market makers have also requested access to offshore ETPs offering permitted Indian Rupee (INR) products. Das also announced RBI’s intention to enhance the security features of the Aadhaar Enabled Payment System (AEPS), which was used by 37 crore people in 2023. “To enhance the security of AEPS transactions, it is proposed to streamline the ‘onboarding’ process including mandatory due diligence for the ‘AEPS Touch Point Operator’ to be followed by banks,” Das said. Instructions will be issued soon. Currently Das said lenders are using the SMS method to comply with additional factor authentication requirements, but advances in technology have opened up new means. “To facilitate the use of such mechanisms for digital security, it is proposed to adopt a framework for principles-based authentication of digital payment transactions,” he said.