The Reserve Bank of India’s Monetary Policy Committee has voted unanimously to keep the policy rate unchanged at 4%. In its first post-budget meet, the MPC decided to maintain the status quo. RBI Governor Shaktikanta Das said that the normalisation is pick up pace in India as fears of a second wave of the coronavirus abate. He said that the Indian economy is expected to be back this year from the damage done by the pandemic. The move gains significance this time as earlier this week the central government unveiled its massive borrowing plan. The 10-year bond yield has gone up from 5.93% a day ahead of the Union Budget to 6.08% yesterday. The MPC cut interest rates by 115 basis points last year to maintain liquidity in the financial system but has maintained the status quo for the last three meetings.
RBI Governor said as GDP grows and the Indian economy grows, the total volume of savings and deposits will expand while adding that the Retail Direct plan will not harm the banks. RBI Governor said that digital currency is a work in progress at the central bank. The government is looking to launch a state-owned digital currency. Retail Direct is a major structural reform, RBI Governor Das said. ‘It has been our endeavor to make G-Sec market accessible to retail investors,’ He added.