RBI Monetary Policy | RBI to issue draft circular on LCR review for banks, says governor

This will further enhance customer convenience and boost adoption of digital payments for small value transactions, Das said.

The Reserve Bank of India (RBI) will soon issue a draft circular to review the liquidity coverage ratio (LCR) for banks, Governor Shaktikanta Das said in his April 5 monetary policy speech.

“A need has arisen to undertake a comprehensive LCR review for banks. A draft circular will be issued for stakeholder consultation,” he said.

Advancement in technology has helped customers to instantly withdraw or transfer money from their bank accounts which sometimes can create challenges for the banks.

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“Technology developments have enabled bank customers to instantly withdraw or transfer money from their bank accounts. While improving customer convenience. This has also created challenges for banks to deal with potential conditions when due to certain factors a large number of customers instantly and simultaneously decide to withdraw money from their accounts. The developments in certain advance jurisdictions during the last year demonstrated the difficulties it can create for banks,” Das said.

The Reserve Bank of India's monetary policy committee (MPC) on April 5 left the key repo rate unchanged at 6.5 percent for the seventh time in a row, in line with the market expectations, with its focus firmly on bringing inflation down.

In its first meeting of FY 25, the rate-setting panel left the stance unchanged as withdrawal of accommodation. The decisions were takes with a 5:1 majority. Repo is the rate at which the central bank lends money to banks for the short term.

The RBI Governor also announced that there will be no changes in the GDP growth forecast for FY25. The GDP growth estimate was retained at 7 percent for the current fiscal year. On the inflation front, the RBI MPC sees it at 4.5 percent for FY25.

Between May 2022 and February 2023, the rate-setting panel raised the repo rate by 250 basis points (bps) but has since held it steady.