The RBI last week kept the repo rate unchanged at 6.50 percent. This is the sixth time in a row that the central bank retained the rate. The move was on the expected lines. Five of the six members of the Monetary Policy Committee voted in favour of the move. As inflation continues to remain above the target of 4%, the 'withdrawal of accommodation' stance was not changed, with the SDF and the MSF rates also kept unchanged at 6.25% and 6.75% respectively.

The central bank viewed that inflation will remain at an average 4.5% in the coming fiscal year. On economic growth, it forecast a “remarkably well,” 7% growth for the economy in the coming fiscal year beginning in April. This is no doubt good news. The Indian economy has remained resilient amid global economic crisis and if the 7% goal is realised, it will be the third straight year for India to grow above 7%.

In another announcement, the central bank made it mandatory for NBFCs to provide KYC in a simple format to borrowers for all retail and MSME loans. This is a welcome move as it will help these borrowers to take an informed decision based on key terms of the loan agreement, including all-inclusive interest cost. Now, banks will have to offer credit at a rate that includes not only interest rate but also other costs such as documentation charges, processing fees, etc.