RBI MPC: Banks, NBFCs must give priority to regulatory guidelines, says RBI Governor

RBI kept the repo rate unchanged at 6.5 percent

Reserve Bank of India governor Shaktikanta Das has asked banks, non-banking finance companies (NBFCs) and other financial institutions to prioritise regulatory guidelines.

“Banks, NBFCs and other FI must give high priority to regulatory guidelines,” Das said on April 5 while sharing the outcome of the monetary policy committee (MPC).

The capital and asset quality of scheduled commercial banks and NBFCs continue to be healthy, the RBI governor said at the conclusion of first policy review of FY25.

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Key indicators of capital and asset quality of scheduled commercial banks continue to be healthy. “Financial indicators of NBFCs are also in line with the banking system as per the latest available data,” Das said.

Over the past few months, the central bank has imposed restrictions on various companies, including Paytm Payments Bank, IIFL Finance, JM Financial, Bajaj Finance and M&M Finance. Industry experts and veterans opined that the RBI may have been alarmed by the aggressive growth in the unsecured loans of some entities.

MPC decision on repo rate

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.

Also read: Concerns over asset quality, risk management may have prompted RBI's crackdown on NBFCs: Experts

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