RBI Holds Repo Rate, Highlights Four Key Banking Sector Concerns

The Reserve Bank of India (RBI) maintained its benchmark rate, with top bankers endorsing the move as a step towards ensuring financial stability. RBI Governor Shaktikanta Das pointed to four primary risks for the banking sector, emphasizing the need for close monitoring to maintain stability.

The Reserve Bank of India's decision to maintain the benchmark rate was widely anticipated, with leading bankers affirming that the move aims to safeguard financial stability.

Indian Banks' Association chairman and Central Bank of India CEO M V Rao remarked, 'RBI's unchanged repo rate and policy stance are on expected lines.'

Unveiling the bi-monthly monetary policy, RBI Governor Shaktikanta Das highlighted four critical risks: structural liquidity from short-term non-retail deposits, excessive consumer loan leverage, oversight on the use of top-up housing loans, and IT outage risks. Rao underscored the policy's importance for financial institutions, urging them to monitor these risks closely.

RBI's Monetary Policy Committee has opted to hold rates for the ninth time consecutively, citing inflation risks and the goal to align retail inflation with a 4 percent target.

SBI Chairman Dinesh Khara pointed out the need to closely monitor food inflation, with hopes that monsoon rains could bring relief. He welcomed the proposed regulatory changes, including a public repository for digital lending apps to promote orderly market development and increased credit reporting frequency for real-time borrower risk assessment.

(With inputs from agencies.)