Reserve Bank of India (RBI) headquarters in Mumbai, India. File
| Photo Credit: Reuters

Mumbai:

The Indian economy is recovering from the slowdown in momentum witnessed in the September quarter, driven by strong festival activity and a sustained upswing in rural demand, according to a Reserve Bank of India (RBI) bulletin released on Tuesday.

An article on the ‘State of the Economy’ in the December bulletin noted that the global economy continues to exhibit resilience with steady growth and moderating inflation.

“High frequency indicators (HFIs) for the third quarter of 2024-25 indicate that the Indian economy is recovering from the slowdown in momentum witnessed in Q2, driven by strong festival activity and a sustained upswing in rural demand,” it said.

The article further said the growth trajectory is poised to lift in the second half of 2024-25, driven mainly by resilient domestic private consumption demand.

“Supported by record level foodgrains production, rural demand, in particular, is gaining momentum. Sustained government spending on infrastructure is expected to further stimulate economic activity and investment,” the authors said.

Global headwinds, however, pose risks to the evolving outlook for growth and inflation, said the article authored by a team led by RBI Deputy Governor Michael Debabrata Patra.

India’s GDP growth slowed to a seven-quarter low of 5.4 per cent during the July-September period of the current fiscal year.

The article said that from the expenditure side, the major factor contributing to the decline in the growth rate of the economy is fixed capital formation and from the production side, the main concern is manufacturing.

“Undermining both is inflation. The erosion of purchasing power due to repeated inflation shocks and persisting price pressures is starkly reflected in weakening sales growth of listed non-financial nongovernment corporations,” it said.

Their outlook on demand conditions also remains subdued as no let-up in the incidence of price shocks seems to be in sight; they will increasingly be inclined to pass on input costs to selling prices.

Consequently, there is no robust capacity creation by investing in fixed assets. Instead, corporations are churning and utilising existing capacity to meet the inflation-dented consumer demand, the article said.

“The result is lacklustre private investment. The slowdown in consumer demand seems to be associated with slower corporate wage growth,” it said.

The authors further said another headwind emerging is the slowing rate of nominal GDP growth, which could hinder fiscal spending, including on capex, to achieve budgetary deficit and debt targets.

The article also noted that as per the projections based on the in-house Dynamic Stochastic General Equilibrium (DSGE), real GDP growth is likely to recover to 6.8 per cent and 6.5 per cent in Q3 and Q4 of 2024-25, respectively.

Growth for 2025-26 is projected at 6.7 per cent while headline CPI inflation (retail) is projected to average 3.8 per cent in 2025-26.

In the December monetary policy, the RBI had projected the GDP growth for 2024-25 at 6.6 per cent with Q3 at 6.8 per cent; and Q4 at 7.2 per cent. GDP growth for the April quarter of 2025-26 was projected at 6.9 per cent; and Q2 at 7.3 per cent.

The RBI said the views expressed in the bulletin are of the authors and do not represent the views of the central bank.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Mumbai:

The Reserve Bank of India (RBI) has directed banks to take immediate steps to reduce the number of inoperative or frozen accounts and to make the activation process smoother and more hassle-free.

To achieve this, the RBI has advised banks to organize special campaigns focused on activating inoperative or frozen accounts.

Additionally, banks have been encouraged to facilitate Aadhaar updates for customers at branches that provide Aadhaar-related services. This initiative aims to assist account holders, particularly those from underprivileged sections of society, in reactivating their accounts with ease.

RBI said “The banks may also organise special campaigns for facilitating activation of inoperative/ frozen accounts. Besides, the banks may also facilitate Aadhaar updation for customers through the branches providing Aadhaar related services”.

It has also given separate instructions to State Level Bankers’ Committees (SLBCs) to proactively monitor the situation in their respective regions to minimize customer inconvenience.

Highlighting the importance of this measure, the RBI noted that many frozen or inoperative accounts belong to people from economically weaker sections.

The central bank urged banks to adopt an empathetic approach in handling such cases, ensuring that the process is simplified for these customers.

It added “the process of activation of such accounts smoother and hassle free, including by enabling seamless updation of KYC through mobile/internet banking, non-home branches, Video Customer Identification Process, etc”.

Furthermore, the RBI pointed out instances where accounts of beneficiaries under government schemes like Direct Benefit Transfer (DBT) or Electronic Benefit Transfer (EBT) were frozen due to pending or periodic KYC updates.

The central bank has instructed banks to segregate these accounts and ensure uninterrupted credit of DBT/EBT funds while addressing KYC-related issues efficiently.

These steps are part of RBI’s broader efforts to improve financial inclusion and reduce barriers for marginalized sections of society in accessing banking services. Banks have been urged to act urgently and ensure customer convenience in resolving account-related issues.

Unclaimed deposits in banks saw a significant increase of 26 per cent year-on-year, reaching Rs 78,213 crore by the end of March 2024.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

On May 19, 2023, the RBI announced its intent to withdraw the ₹2,000 notes introduced in 2016 for quick remonetisation. File
| Photo Credit: The Hindu

Governor Shaktikanta Das on October 6 said ₹3.43 lakh crore of ₹2,000 denomination notes have come back to the system so far, and reminded the public that they can return the withdrawn notes at 19 RBI offices from October 8.

Addressing the customary post-policy press meet in Mumbai, Mr. Das said 87% of the notes which have been returned have been deposited into bank accounts, while the rest have been exchanged over the counter.

Also read | Impact of ₹2,000 notes withdrawal ‘very very marginal’ on economy: RBI Governor

At present, over ₹12,000 crore of notes are still in circulation, Mr. Das said, reiterating that the notes can be returned even after the end of the extended period.

It can be noted that on May 19, the RBI had surprised all by announcing its intent to withdraw the ₹2,000 note introduced in 2016 for quick remonetisation, following Prime Minister Narendra Modi’s announcement to suck out over 88% of currency in circulation by banning the ₹500 and ₹1,000 notes.

The RBI, which had initially given time till September 30, for getting the notes deposited or exchanged, extended the same by a week till October 7, on the last date.

Maintaining that the notes continue to be legal tender, the RBI had also announced a new system for getting them deposited or exchanged.

“… thereafter (from October 8) it can be, you know, deposited in or exchanged in the Reserve Bank in the issue offices of the Reserve Bank, which is there in almost every state capital we have presence. So there are 19 of them,” Mr. Das told reporters on Friday.

He added that the original objective of withdrawing the notes, which was also driven by the need to take care of old notes, has been “largely met”.

Mr. Das also said that the postal department’s services can be availed in case someone cannot travel to the RBI offices.