Reserve Bank of India Governor Shaktikanta Das. File
| Photo Credit: PTI

RBI Governor Shaktikanta Das on Friday emphasised on the need to eliminate biases in algorithms as the use of artificial intelligence (AI) and machine learning (ML) is on the rise.

Delivering the inaugural address at the 18th Statistics Day Conference organised by the RBI, he said the use of statistics had been ever growing as a preferred tool for drawing inferences in diverse fields and the discipline had moved beyond collection of facts to focusing more on interpretation and drawing inferences, taking into account the level of uncertainty.

The Reserve Bank of India (RBI) has ventured into AI/ML analytics in multiple areas. Under the RBI’s aspirational goals for RBI@100, Mr. Das said the central bank was aiming to develop cutting-edge systems for high frequency and real-time data monitoring and analysis.

Mumbai:

India is at the threshold of a major structural shift in its growth trajectory, highlighted Shaktikanta Das, Reserve Bank of India Governor, on Tuesday during his address at the 188th AGM (Annual General Meeting) of Bombay Chamber of Commerce & Industry.

The governor added that India is moving ahead towards 8 per cent GDP growth in a sustained manner, adding that the average growth India recorded in the last three years is 8.3 per cent.

“If you look at the average growth India recorded over the three years, the average comes to 8.3 per cent and the current year we have given a projection of 7.2 per cent growth,” said the Governor.

He also stated that during the last year, the Indian economy has contributed a major share to the global economy and called it an achievement for India.

“Indian economy in the last financial year 2023-24 contributed to 18.5 per cent of the global growth, i.e., 18.5 per cent of the global growth was driven by India. It is an achievement; it was much lower 7 or 8 years ago and I think the IMF projects this growth to go up,” he said.

He highlighted that the major drivers of this growth are the implementation of GST, the Insolvency and Bankruptcy Code, and Flexible Inflation Targeting.

“The main drivers of this growth, particularly in the last three years, are the various structural reforms which have been undertaken and several other policy initiatives that have been undertaken in the country, including GST,” he added.

Highlighting the importance and achievements of GST, the governor added, “It (GST) has the advantage of avoiding the multiplicity of taxes. GST is one of India’s biggest structural reforms since 1947.”

He added that GST has settled down in India well because there are instances where some countries have rolled back GST after implementation. But now GST collections have touched 1.7 lakh crore in a month and it is in a range of 1.5 to 1.7 lakh crore every month.

He also shared that India is poised to become the third-largest economy from the current fifth-largest

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

Mumbai:

RBI Governor Shaktikanta Das on Thursday said that the Indian financial system is in a “much stronger position,” characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders.

Underscoring the imperative of fostering a future-ready ethos within the financial sector, Das also stressed the critical role of timely supervisory intervention in mitigating systemic risks.

The RBI Governor said this while delivering an address at the inaugural Global Conference on Financial Resilience organised by the College of Supervisors at the IGIDR Campus in Mumbai.

“India’s domestic financial system is now in a much stronger position than it was before we entered the period of the COVID crisis. Indian financial system is now in a much stronger position, characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders, that is NBFCs,” he said.

He added, “I would like to compliment the banks and other financial sector entities for such a stellar performance in the year which has just ended on March 31. There is absolutely no room for complacency because the world is changing, challenges are coming, complexities are growing, and problems can originate from any corner of the financial system within the country, or the world because of something which may be completely unrelated to you and me…”

Governor Shaktikanta Das began by referencing to global banking failures, including those in the United States, and the challenges faced by institutions like Credit Suisse, emphasizing the lessons learned from such incidents.

He acknowledged the detailed analysis conducted by the US Federal Reserve on bank failures and stressed the importance of proactive regulatory measures to prevent crises.

Highlighting RBI’s proactive approach, Governor Shaktikanta Das cited the intervention in the Yes Bank crisis as a testament to the central bank’s ability to preemptively address financial instability.

He noted the advantages of RBI’s integrated approach in leveraging various facets of banking operations to manage crises effectively.

Addressing the diverse origins of financial crises, Governor Shaktikanta Das identified internal deficiencies within organizations, external factors like climate change, technological disruptions, and undetected fraud as potential catalysts.

He emphasized the need for supervisors to enhance their methods and align them with evolving stress scenarios over time.

Governor Shaktikanta Das outlined RBI’s recent supervisory initiatives, including the moderation of unsecured lending and reduction in bank exposure to Non-Banking Financial Companies (NBFCs), aimed at preempting future risks.

Das said, “Fortunately, all stakeholders in India, namely, the Reserve Bank, the Banks and Non-banking financial companies (NBFCs), and the government have made tangible efforts in this direction. India’s domestic financial system is now in a much stronger position, characterised by robust capital adequacy, low levels of nonperforming assets, and healthy profitability of banks and NBFCs.”

He stressed the importance of continuous vigilance despite current sectoral stability, urging financial institutions to embrace technological advancements while maintaining robust governance and ethical standards.

He highlighted the pivotal role of AI and machine learning in fraud prevention and operational efficiencies, underscoring the need for secure technological integrations aligned with business goals.

Das stated, “AI and ML can enhance predictive analytics and enable banks and NBFCs to identify potential risks and trends more accurately. These technologies can improve fraud detection by recognising unusual patterns and transactions in realtime. Thus, they can protect the institutions and their customers from financial crimes and frauds.”

He further added, “Operational efficiency can be improved through automation of routine tasks, which reduces human error and frees up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume and repetitive tasks, such as data entry and transaction processing, more quickly and accurately than humans.”

Looking ahead, Governor Shaktikanta Das outlined RBI’s commitment to regulatory stability, emphasizing a thematic and activity-based supervisory approach.

He highlighted RBI’s efforts to establish a unified supervision department and engage senior officers to foster closer collaboration with bank boards.

Governor Shaktikanta Das expressed RBI’s ambition to position itself as a model for emerging economies, advocating for a holistic, customer-centric regulatory framework as RBI approaches its centenary.

Governor Shaktikanta Das emphasized RBI’s ongoing initiatives, including the creation of a unified supervision department and the adoption of unconventional methods to enhance regulatory effectiveness.

He highlighted the proactive engagement of senior officers at Executive Director levels with bank boards to reinforce RBI’s oversight priorities.

Governor Shaktikanta Das reiterated RBI’s vision for its centenary, aiming to position the institution as a benchmark for the Global South through a holistic, customer-centric regulatory framework.

These initiatives underscore RBI’s commitment to fostering financial resilience and maintaining high standards of governance in the dynamic global financial landscape.

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

RBI Governor Shaktikanta Das on June 7, 2024, said the Monetary Policy Committee has decided to keep the repo rate unchanged at 6.5%. File
| Photo Credit: ANI

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5%. The decision, taken at the MPC’s meeting on Friday, marks the eighth time in a row that the policy rate has been put on hold to keep the focus on battling high inflation.

The MPC has revised its GDP growth forecast upwards from the earlier 7% estimate to 7.2% for the financial year 2024-2025. It has also decided to remain focused on withdrawal of accommodation to ensure that inflation does not accelerate, while supporting growth.

“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth,” Reserve Bank of India (RBI) governor Shaktikanta Das said after the meeting. 

Divided MPC

Mr. Das, along with MPC members Shashanka Bhide, Rajiv Ranjan, and Michael Debabrata Patra voted to keep the policy repo rate unchanged at 6.5% and to remain focused on the withdrawal of accommodation, while their colleagues Ashima Goyal and Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points and for a change in stance to neutral. 

“There were signs of a more divided policy committee, with one additional member voting for a softening in stance as well as policy direction. The majority retained their cautious stance to guide inflation towards the 4% target on a durable basis, despite recent signs of disinflation,” said Radhika Rao, Executive Director and Senior Economist, DBS Bank, commenting on the decision.

Higher growth forecast

According to the MPC, high frequency indicators of domestic activity are showing resilience in 2024-25. The south-west monsoon is expected to be above normal, which augurs well for agriculture and rural demand, but headwinds from geopolitical tensions, volatility in international commodity prices, and geoeconomic fragmentation pose risks to the outlook. 

Taking various factors into consideration, real GDP growth for 2024-25 was projected at 7.2% as compared with the earlier projection of 7%, with the first quarter (Q1) growth estimate at 7.3%; Q2 at 7.2%; Q3 at 7.3%; and Q4 at 7.2%. The risks are evenly balanced.

Elevated food inflation

Emphasising that inflation has seen sequential moderation since February 2024, albeit in a narrow range from 5.1% in February to 4.8% in April 2024, the RBI Governor said that food inflation, however, remains elevated due to persistence of inflation pressures in vegetables, pulses, cereals, and spices. 

“Looking ahead, overlapping shocks engendered by rising incidence of adverse climate events impart considerable uncertainty to the food inflation trajectory,” he said, while announcing the MPC’s decisions. He added that volatility in crude oil prices and financial markets, along with the firming up of non-energy commodity prices, pose upside risks to inflation. 

Taking various factors into account, CPI inflation for 2024-25 is projected at 4.5%, with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5%. The risks are evenly balanced.

Mr. Das emphasised that the path of disinflation has been interrupted by volatile and elevated food inflation due to adverse weather events. “Inflation is expected to temporarily fall below the target during Q2:2024-25 due to favourable base effect, before reversing subsequently. The MPC will remain resolute in its commitment to aligning inflation to the 4% target on a durable basis,” he said. 

The MPC reiterated the need to continue with the disinflationary stance, until a durable alignment of the headline CPI inflation with the target is achieved. 

RBI Governor Shaktikanta Das.
| Photo Credit: ANI

Reserve Bank Governor Shaktikanta Das on April 8 stressed the need for greater participation of Indian banks in rupee derivatives market, both domestically and offshore, while being prudent.

The Governor noted that participation of domestic banks in derivative markets remains limited with only a small set of active market-makers. Also, participation of Indian banks in global markets is growing but it is quite small.

“Domestic banks are dealing with market-makers in global markets rather than with end clients and are yet to emerge as market-makers of note globally,” Das said in his keynote address at the FIMMDA-PDAI Annual Conference in Barcelona.

Of course, he added banks need to do their own due diligence, assess their risk appetite, and then move forward carefully in this direction.

Also Read | RBI holds firm on rupee derivatives stance, defers norm implementation to May 3

“Going forward, our focus should be on enhancing and widening the participation of Indian players in markets for INRderivatives, both domestically and offshore, while being prudent,” the Governor said.

He noted that the recent financial market reforms undertaken by the Reserve Bank are aimed at providing a strong bedrock for markets to move to the next trajectory for meeting the growing funding requirements in the economy, providing cost-effective hedging options and competing effectively in global markets.

There are, however, some areas which call for attention, he said, while highlighting specific areas where more can be done.

Das said transparency in pricing remains work in progress and more can be done.

“The retail customer is yet to get a deal at par with large customers. There is a need for effective market-making and finer pricing for smaller deals on NDS-OM,” he said.

Divergence in pricing in FX markets for small and large customers is wider than what can be justified by operational considerations, Mr. Das said, and added that banks may need to do more to facilitate the use of the FX Retail platform..

“We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX trading platforms. This warrants enhanced vigilance by the banks,” the Governor said.

He further said efforts are being made to leverage technology for achieving greater efficiency while also meeting the objectives of market reforms.

Also Read | RBI’s stance on underlying exposure for FX derivatives said to be unchanged

The Reserve Bank, he added remains engaged with stakeholders to assess the need for the introduction of new products and infrastructure based on evolving market developments.

“Innovation has been sought to be promoted through a move towards principle-based regulation, widening of the participant base, introduction of new products and platforms as well as enabling access to offshore markets,” Mr. Das said.

In his address, the governor also dwelt upon the journey of the Reserve Bank, especially in the context of its role in developing the financial markets in India in the recent period.

The RBI has entered its 90th year of its formation on April 1, 2024.

The retail inflation in February was 5.1%, while inflation in the food basket was at 8.66%.

The Reserve Bank of India (RBI) on April 5 said food price uncertainties continue to weigh on the inflation trajectory going forward, even as it retained 4.5% retail inflation projection for the current fiscal.

In its first bi-monthly monetary policy for current fiscal, the RBI said notwithstanding the cut in petrol and diesel prices in mid-March 2024, the recent uptick in crude oil prices needs to be closely monitored.

“Continuing geopolitical tensions also pose upside risk to commodity prices and supply chains,” RBI said. “Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5%,” RBI governor Shaktikanta Das said.

RBI Monetary Policy updates | Policy repo rate unchanged at 6.5%; real GDP growth for FY25 projected at 7%

Although RBI retained the full year inflation projection, it tweaked the forecasts for the quarter. RBI forecast April-June quarter inflation at 4.9% and in September quarter at 3.8%.

For December and March quarters, inflation is projected at 4.6% and 4.7%, respectively. The RBI said that deflation in fuel is likely to deepen in the near term, following the cut in LPG prices in March.

The government last month announced a steep cut of ₹100 in cooking gas LPG prices to ease the financial burden on households. Also, public sector oil retailers cut petrol and diesel prices by ₹2/litre, ending a nearly two-year-long hiatus in rate revision.

“Food price uncertainties continue to weigh on the inflation trajectory going forward. A record rabi wheat production would help temper price pressure and replenish the buffer stocks. Moreover, early indication of a normal monsoon augurs well for the kharif season,” RBI said.

RBI said inflation has come down significantly but remains above the 4% target. Food inflation continues to exhibit considerable volatility impeding the ongoing disinflation process.

“Our ongoing effort is to ensure fuller transmission of policy actions and anchoring of household inflation expectations. The strong growth momentum, together with our GDP projections for 2024-25, give us the policy space to unwaveringly focus on price stability,” RBI said.

The RBI has the mandate to contain retail or consumer price index (CPI) inflation at 4%, within a band of +/-2%. Mr. Das said two years ago, around this time, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation.

“The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis.”

“In other words, it is essential, in the best interest of the economy, that CPI inflation continues to moderate and aligns to the target on a durable basis. Till this is achieved, our task remains unfinished,” Mr. Das said.

The retail inflation in February was 5.1%, while inflation in the food basket was at 8.66%. For the 2023-24 fiscal, RBI has projected average retail inflation at 5.4%.

The spike in food prices has kept the Reserve Bank of India (RBI) worried even though overall inflation has moderated to a certain extent.

On April 5, the Central bank’s Monetary Policy Committee decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%. This is the seventh time that the rates have been kept on hold.

“The Monetary Policy Committee (MPC) remains focused on aligning inflation to the target on a durable basis. We derive satisfaction from the progress made under disinflation. But the task is not yet finished,” RBI Governor Shaktikanta Das said at a press conference after the MPC meeting.

RBI Monetary Policy updates | Policy repo rate unchanged at 6.5%; real GDP growth for FY25 projected at 7%

The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

Food price uncertainties

In his monetary policy statement, Mr. Das said, “Food price uncertainties continue to weigh on the inflation trajectory going forward. A record rabi wheat production would help temper price pressure and replenish the buffer stocks. Moreover, early indication of a normal monsoon augurs well for the kharif season.”

“International food prices also remain benign. The tight demand supply situation in certain categories of pulses and the production outcomes of key vegetables warrant close monitoring, given the forecast of above normal temperatures in the coming months,” he said.

“Frequent and overlapping adverse climate shocks pose key upside risks to the outlook on international and domestic food prices,” he said, adding that as per the Indian Mereological Department’s forecast, the months of April, May, and June will witness above normal maximum temperatures in most parts of the country. 

Volatile food inflation

Answering a question on what is fuelling food inflation, RBI Deputy Governor Michael D. Patra told The Hindu, “Food inflation has been highly volatile. In February 2024 it was 7.8% and the indications are that in view of adverse climate events recurring, it will remain high.”

“The actors keep shifting. Sometime it is cereals, then vegetables and currently it is protein which is eggs, meat and fish. There is some firmness in rice prices,” he said. “These are short duration spikes but since they occur on multiple occasions, they give a persistent character. So what we are worried about is that there should not be any spillover to the rest of the CPI. So we remain watchful, very closely.” Mr. Patra added.

Growth-inflation dynamics

Overall inflation has been controlled to a certain extent; since the last policy, the growth-inflation dynamics have played out favourably.

While growth has continued to sustain its momentum, surpassing all projections. headline inflation has eased to 5.1% during January and February 2024 from 5.7% in December 2023, with core inflation declining steadily over the past nine months to its lowest level in the series, Mr. Das said in his monetary policy statement.

He added that the fuel component of the CPI remained in deflation for six consecutive months; food inflation pressures, however, accentuated in February.

“Looking ahead, robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4%. As the uncertainties in food prices continue to pose challenges, the MPC remains vigilant to the upside risks to inflation that might derail the path of disinflation,” he said.

“Under these circumstances, monetary policy must continue to be actively disinflationary to ensure anchoring of inflation expectations and fuller transmission of the past actions. The MPC, therefore, decided to keep the policy rate unchanged at 6.50% in this meeting and remain focused on withdrawal of accommodation. The MPC will remain resolute in its commitment to aligning inflation to the target,” he added.

Fuel price deflation

Mr. Das said that cost push pressures faced by firms were seeing an upward bias after a period of sustained moderation.

“Deflation in fuel is likely to deepen in the near term, following the cut in LPG prices in March. Notwithstanding the cut in petrol and diesel prices in mid-March, the recent uptick in crude oil prices needs to be closely monitored. Continuing geo-political tensions also pose upside risk to commodity prices and supply chains,” he said.

Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5% with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5% . The risks are evenly balanced.

Growth prospects

Around this time two years ago, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation, Mr. Das said. “The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis. In other words, it is essential, in the best interest of the economy, that CPI inflation continues to moderate and aligns to the target on a durable basis. Till this is achieved, our task remains unfinished,” he said.

On growth prospects, the Governor said that headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions, and extreme weather events pose risks to the outlook.

Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7%, with Q1 at 7.1%; Q2 at 6.9%; Q3 at 7%; and Q4 at 7%. The risks are evenly balanced.

Governor Das, announcing the Monetary Policy decision, said that CPI inflation for FY25 has been projected at 4.5%. The Committee has maintained its figures from February.

Back in February, CPI inflation was projected at 5.4 per cent for 2023-24 with Q4 at 5.0 per cent.

Food inflation pressures accentuated in February; MPC remains vigilant towards upside risk of inflation, says RBI Governor.

High, persisting food inflation could unhinge anchoring of inflationary expectations, he added. 

The RBI and Bank Indonesia MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries. 
| Photo Credit: Reuters

The Reserve Bank of India (RBI) and the Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) on March 7 in Mumbai for establishing a framework to promote the use of local currencies viz., the Indian Rupee (INR) and the Indonesian Rupiah (IDR) for cross-border transactions. The MoU was signed by the Reserve Bank of India governor Shaktikanta Das and the Bank Indonesia governor Perry Warjiyo.

The MoU on establishing a framework for cooperation in the area of cross-border transactions in local currencies between India and Indonesia, aims to promote the use of INR and IDR bilaterally.

The MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries.

This framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-IDR foreign exchange market.

“Use of local currencies would optimise costs and settlement time for transactions,” the RBI said in a statement.

“Use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Indonesia as well as deepen financial integration and strengthen the long historical, cultural and economic relations between India and Indonesia,” the statement added.

File picture of RBI Governor Shaktikanta Das, who said that India accounts for 40% of all digital payments in the world
| Photo Credit: ANI

Reserve Bank of India Governor Shaktikanta Das said on Monday that digital transactions in India have grown 90-fold in 12 years.

Mr. Das was speaking at the RBI headquarters in Mumbai during the central bank’s Digital Payments Awareness Week programme.

The RBI chief went on to note that India accounts for 40% of all digital payments in the world, and that UPI transactions now account for 80% of all digital payments in India.

“In 2012-13, there were 162 crore digital payments. This number has grown to 14,726 crore in 2023-24 till February,” he sid.