The Reserve Bank of India’s Monetary Policy Committee (MPC) has announced several key updates. The UPI transaction limit for tax payments has been increased from ₹1 lakh to ₹5 lakh, aiming to simplify larger transactions. Additionally, a new feature called “Delegated Payments” allows primary users to set transaction limits for others using their bank accounts, enhancing UPI’s functionality. The MPC has also addressed adjustments to interest rates and inflation targets to guide economic conditions and growth. Furthermore, updates on economic projections and measures for maintaining financial stability have been provided.
Mr. Abheek Barua, Chief Economist – HDFC Bank on RBI Monetary Policy Committee (MPC) Decision
A no change policy with the RBI keeping the repo rate and its stance unchanged. This decision to stay on course has been clearly guided by domestic factors even as rate cut expectations have risen globally. The overall tone of the policy seemed hawkish with the RBI highlighting the risks around stickiness in food inflation. The food inflation forecast was raised by 60bps for Q2 FY25 to 4.4% and now inflation forecasts for the next four quarters all stand above 4%. With the RBI refraining from creating any space for a policy pivot, expectations of a future rate cut or change in stance will have to be pushed forward.
Mr Nikunj Saraf, Vice President, Choice Wealth
“The RBI has decided to hold its key interest rate steady at 6.50% for the ninth consecutive meeting. This decision, approved by a 4:2 majority, demonstrates the central bank’s ongoing commitment to balancing the need for inflation control with supporting overall economic stability. Maintaining its ‘withdrawal of accommodation’ stance, the RBI is aiming to manage inflation while still nurturing growth. Food inflation remains a major concern, with the Consumer Price Index (CPI) reaching 5.1% in June, largely driven by rising vegetable prices. Given that food items account for a significant portion of the CPI basket, the RBI’s focus on reining in these prices is crucial. Although the RBI has retained its FY25 real GDP growth forecast at 7.2%, slight downward revisions to the quarterly projections suggest a somewhat cautious view of the immediate economic conditions. However, positive factors like a favourable monsoon and increased kharif sowing are expected to buoy economic growth. To facilitate lending, the RBI is emphasizing flexible liquidity management, as evidenced by the rise in top-up home loans. However, any potential rate cuts are likely to be postponed until late 2024, with the priority being on controlling inflation over providing short-term economic stimulus. The central bank has also introduced new regulatory measures, including the creation of a public repository for digital lending apps and an increase in the UPI tax payment limit to boost digital transactions. With record-high forex reserves of $675 billion, the RBI is well-positioned to handle external economic shocks, but remains vigilant to global economic trends.”
Mr. Vedanshu Kedia – Director, Prescon Group
“We commend the Reserve Bank of India for its decision to keep the repo rate at the moderate level of 6.5%, to adequately balance the inflation and development goals of the country. The government’s commitment to ensuring rate stability is a positive step, it will likely maintain growth in the real estate and infrastructure sectors. We are particularly encouraged by the balanced approach on maintaining liquidity and supporting financial institutions, while balancing inflation. With these measures in place, we remain optimistic about the future of India Inc and anticipate a positive impact on the broader economy.”
Mr Amit Prakash Singh, Co-Founder & Chief Business Officer, Urban Money, a loan distributor
“On expected lines, the RBI has chosen to keep the repo rates unchanged at 6.50% as it aims to keep inflation in check amidst robust economic growth. This decision means borrowing costs will remain steady, and interest rates on loans and credit cards will stay put. While this move boosts market sentiment, it’s worth noting that people were undeterred despite last year’s rate hike, as credit growth maintained a double-digit spree driven by personal and home loans due to strengthening consumption patterns and housing demand. At Urban Money, we are witnessing similar trends across all segments, with the most significant growth in personal and home loans. Consumers are confident about their future earnings and are willing to invest in their aspirations. This resilience highlights strong economic confidence and a sustained demand for finance solutions in upcoming period.”
Mr. Umesh Revankar, Executive Vice Chairman, Shriram Finance Limited
“The RBI’s decision to maintain the existing Repo Rate, MSF and SDF is on expected lines and will help in maintaining a great balance in the financial sector and keeping it stable and healthy. This decision reflects the RBI’s focus on balancing inflation control and supporting economic growth. The regulator’s plan to put in place a public repository for digital lending apps shows their focus on safeguarding the common man’s hard earned money.
We are more than half way through the monsoon season and a prolonged festive season is approaching, the unchanged repo rate will keep interest rates steady and help the interest-sensitive sectors like real estate, automotive, home improvement, etc.
The various initiatives taken by RBI shows that the overall growth outlook remains positive. However, the RBI has also cautioned that banks and financial institutions need to build strong frameworks to ensure operational resilience which will help them buffer themselves from global volatility.”
Mr. Sampad Swain, Co-founder & CEO, Instamojo
“We appreciate the RBI’s advancements towards UPI in the policy meet today, which support the vision of a Digital India. By raising the limit to ₹5 lakh per transaction, high-value payments for MSMEs and small merchants will become more streamlined, enhancing payment efficiency and financial management. The ‘Delegated Payments’ feature adds another layer of control, enabling primary users to authorize others with set transaction limits. This is particularly beneficial for our merchants who can now delegate payment tasks while maintaining strict oversight. These innovations will drive higher adoption rates, expand the reach of digital payments across diverse demographics, and further our commitment to empowering businesses through digital commerce solutions.”