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RBI Policy announcement : Takeaways pertaining to the Banking sector By YES Securities

On Bharat Bill Payment System (BBPS)

It has been proposed that that the BBPS will now accept cross-border inward bill payments.

This has been done, as per the RBI, to facilitate NRIs to undertake utility, education and other bill payments on behalf of their families in India.

Potential impact: Ceteris paribus, this would enhance remittances flows into India. It would also serve to expand the scope of the BBPS and enhance the BBPS-linked business that banks and fintech companies are engaged in.

Credit Information Companies (CICs)

It has been decided to bring CICs under the RBI – Integrated Ombudsman Scheme.

As per the RBI, this has been done to provide cost-free alternate redress mechanism to customers for grievances against CICs.

Potential impact: This will foster more discipline on the part of CICs in terms of how they analyse borrower data before making hitherto unilateral numerical pronouncements about borrower credit-worthiness.

Code of Conduct of Outsourcing of Financial Services

The RBI will issue draft master directions shortly for public comments.

Potential impact: This will service to reduce risks to the financial sector due to outsourcing of financial services.

Comments on Policy Rate and Inflation

* The MPC has decided to increase the policy rate unanimously by 50 bps 5.4%.

* The MPC remains focused on withdrawal of accommodation.

* Consumer price inflation has eased but remains uncomfortably high and Core inflation also has been elevated.

* The RBI inflation forecast for FY23 is 6.7%.

* The real GDP growth projection for F23 has been retained at 7.2%.

Comments on liquidity and financial market conditions

* Via the SDF, the RBI has raised floor of the LAF corridor of 40 bps.

* Along with repo rate hikes, this has led to a withdrawal of accommodation of 130 bps.

* The weighted average call rate (WACR), which is the operating target of monetary policy, has moved up accordingly.

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