Your existing loans will not become expensive, nor will your EMI increase. This is because the Reserve Bank of India (RBI) has maintained interest rates at 6.5%. The central bank has not changed the rates for the 11th consecutive time. The last time the interest rate was raised was in February 2023 by 0.25% to 6.5%. Reserve Bank Governor Shaktikanta Das on Friday informed about the decisions taken in the Monetary Policy Committee (MPC) meeting. This meeting is held every two months. RBI has also expressed apprehension of rising inflation, which may have a negative impact on economic growth. That is why the GDP growth estimate has been reduced from 7.2% to 6.6% in the next financial year. What did the common man get in RBI’s monetary policy meeting? 1. For loan customers: RBI has kept the interest rates unchanged at 6.5%. That is, loans will not become expensive and the EMI of the existing loan will also not increase. RBI last raised rates by 0.25% to 6.5% in February 2023. 2. For farmers: It has been decided to increase the limit of collateral free agricultural loan i.e. loan without pledging any goods from Rs 1.6 lakh per borrower to Rs 2 lakh per borrower. This change has been made keeping in mind the increase in agricultural input cost and overall inflation. It was last changed in 2019. 3. For UPI customers: Small finance banks have now also been allowed to provide credit line on UPI i.e. payment facility even if there is no money in the account. It was started in September 2023. Then it was made available through scheduled commercial banks like SBI, HDFC, ICICI and other such big banks. RBI says that with the latest decision, more people will be able to use the facility of financial transactions. 4. For banks: The committee has reduced the mandatory cash reserve ratio (CRR) for banks from 4.50% to 4%. This will increase the cash with banks, which they can use to distribute loans. Banks have to keep a minimum percentage of their deposits with RBI as reserve. This is called CRR. RBI uses it to control the money flow in the economy. This controls liquidity i.e. availability of cash in the market. 5. On economic growth: RBI governor expressed hope for the country’s economy to remain better, but also mentioned some challenges which can affect it: Understand RBI’s estimates regarding economic growth and inflation through graphics… RBI increased interest rates by 1.10% in 5 times since 2020 Reserve Bank of India (RBI) cut interest rates by 0.40% twice during Corona (27 March 2020 to 9 October 2020). After this, in the next 10 meetings, the Central Bank increased interest rates 5 times, did not make any change four times and once cut it by 0.50% in August 2022. Before Covid, the repo rate was at 5.15% on 6 February 2020. 4 out of 6 members of the committee are not in favor of changing interest rates. MPC has 6 members, including 3 RBI officials and the remaining 3 are nominated members by the government. RBI Governor Shaktikanta Das, Deputy Governor Michael Patra and Executive Director Rajiv Ranjan are already included. At the same time, the government has appointed Ram Singh, Saugata Bhattacharya and Nagesh Kumar as external members in the committee on October 1. The RBI Governor said that 4 out of 6 members of the Monetary Policy Committee were not in favor of changing the interest rates. Due to no change, the Standing Deposit Facility i.e. SDF rate remains at 6.25% and the Marginal Standing Facility i.e. MSF rate and bank rate remain at 6.75%. Policy rate is a powerful tool to fight inflation Any central bank has a powerful tool to fight inflation in the form of policy rate. When inflation is very high, the central bank tries to reduce the money flow 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 return, banks make loans expensive for their customers. This reduces the money flow in the economy. When the money flow is low, demand decreases and inflation decreases. Similarly, when the economy goes through a bad phase, there is a need to increase the money flow for recovery. In such a situation, the central bank reduces the policy rate. This makes the loan that banks get from the central bank cheaper and customers also get loans at a cheaper rate. RBI trending on Google RBI Governor Shaktikanta Das on Friday informed about the decisions taken in the meeting of the Monetary Policy Committee (MPC). After this news, RBI is being continuously searched on Google. If we look at the Google trends of the last 30 days, it is clear that the graph of searching for RBI has increased. Source- GOOGLE TRENDS Read also… ?1 lakh crore in inactive bank accounts in the country: Such accounts are also promoting fraud, RBI is preparing to put a check on it Reserve Bank of India (RBI) has expressed concern over the increasing frozen and inoperative accounts in banks. Banks have been instructed to immediately take all possible necessary steps to reduce such accounts. Banks have been asked to adopt easy processes like mobile or internet banking, non-home branch, video customer identification for KYC of such accounts. Read full news…
