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RBI Annual Report 2023-24: RBI Projects Real GDP growth at 7% for fiscal year 2024-25

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RBI forecasts real GDP growth for current 2024-25 fiscal year at 7%The Reserve Bank of India’s (RBI) Annual Report 2023-24 has been released and presented to the Central Government under the Section 53 (2) of the Reserve Bank of India Act,1934.

  • It is a statutory report RBI’s central board of directors that presents the working and functions of the Reserve Bank of India for the April 2023-March 2024 period.
  • The main aim of the RBI’s Annual Report is to inform the people on the goals RBI projected to achieve during the past year and what was actually accomplished.
  • The report shows the proposals planned out for the coming year. The report also focuses on the sustainability of investment revival, stable inflation, global economic growth, financial conditions, policy measures, regulatory developments among some important aspects of the economy.

Below are some key highlights of the report:

RBI forecasts the Real GDP growth at 7% for the current fiscal year 2024-25

i.RBI in its Annual Report has showed that the Indian economy is likely to grow at 7 percent for 2024-25. This will be the third successive year of 7 per cent or above growth.

ii.The economy’s real GDP growth increased to 7.6 per cent from 7.0 per cent in 2023-24.

iii.The Gross Fixed Capital Formation(GFCF) increased to 10.2 per cent in 2023-24 from 6.6 per cent in 2022-23 showing investment as the major contributor of domestic demand backed by government spending on infrastructure.

iv.Headline inflation softened to 5.4% during 2023-24 from 6.7% in the previous year.

RBI’s FY24 income rises 17% to Rs.2.75 lakh crore; expenditure declines by 56%

i.The RBI Annual report indicated a 17% increase in FY24 income to ₹2,75,572.32 crore.Expenditure on the other hand, declined by 56.3% to Rs.64,694.33 crore from ₹1,48,037.04 crore in FY2023.

ii.The size of the RBI’s balance sheet increased by 11% to ₹70.47 lakhcrore from 63.44 lakh crore in FY23.

iii.The increase on asset side was due to rise in foreign investments, gold, and loans and advances while liabilities side expanded due to increase in notes issued, deposits and other liabilities.

Net income increases to ₹2.11 lakh crore due to higher interest from foreign securities

i.RBI’s Annual report showed a rise in the net income of 2.11 lakh crore (17 percent) in the financial year 2024 as compared to ₹87,420 crore in FY23.

ii.The Reserve Bank of India gained an amount of Rs. 83,616 crores from foreign exchange transactions while interest income from foreign securities increased to ₹65,328 crore.

iii.RBI made a provision of Rs 42,800 crore to contingency fund for FY24 but No provision was made towards Asset Development Fund (ADF).

iv.RBI attributed the increase on assets side was due to rise in foreign investments, gold, and loans and advances by 13.90 percent, 18.26 percent and 30.05 percent, respectively.

v.The central bank’s domestic assets constituted 23.31 percent while foreign currency assets, gold (including gold deposit and gold held in India) and loans and advances to financial institutions outside India constituted 76.69 percent of total assets as of March 31, 2024, as against 26.08 percent and 73.92 percent, respectively, as of March 31, 2023.

₹27,031 crore of Sovereign Gold Bonds purchased in FY24

i.Investors have purchased a total of Rs.27,031 crore of Sovereign Gold Bonds in 2023-24 which is four times of the amount purchased in 2022-23.

ii.The bonds bought by investors represented worth 44.34 tonnes of gold during 2023-24 while 12.26 tonnes of gold were purchased in 2022-23.

iii.Since the inception of the SGB scheme in November 2015, Rs 72,274 crore (146.96 tonnes) has been raised through 67 tranches.

iv.SGBs are issued in denominations of one gram of gold and multiples thereof. The minimum investment should be one gram, with a limit of 4 kg subscription for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March).

Monetary penalties imposed by RBI doubled to ₹86.11 cr in FY24

i.The monetary penalties imposed by the RBI on regulated entities (REs) has doubled to ₹86.11 crore in FY24 as compared to Rs.40.39 crore in FY23 for non-compliance with provisions and certain directions issued by the RBI from time to time.

ii.In FY24, the central bank imposed monetary penalties on 281 REs (public sector banks, private sector banks, foreign banks, payments banks, small finance banks, regional rural banks, co-operative banks, Non-Banking Financial Companies (NBFCs), Credit Information Companies (CICs) and Housing Finance Companies (HFCs)) against 211 in FY23.

Counterfeit notes detected at RBI increased in the financial year 2023-24

i.The number of counterfeit notes detected at RBI rose to 17,613 pieces in the FY 2023-24 as compared to 10,465 pieces detected in FY23.

ii. The total number of counterfeit notes detected stood at 2,22,639 pieces out of which a total of 2,05,026 pieces were detected at other banks, and 17,613 pieces were detected at RBI.

iii.Out of the total Fake Indian Currency Notes (FICNs) detected,7.9 per cent were detected at the RBI. They were detected in denominations of Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500 declined during 2023-24, while those in Rs 200 denomination increased marginally.

A total of 36,075 cases of band frauds been reported in FY24

i.The report showed that the number of bank fraud cases have increased by 166% to 36,075 from the 13,564 cases reported in FY23.

ii.The amount involved in the bank frauds decreased 46.7 percent year-on-year to Rs 13,930 crore in FY23.

iii. Maximum fraud cases have occurred under the digital payments category while the fraud cases reported in the loan portfolio (under the advances category) have led to the primary source of financial loss.

iv.The RBI said it will set up a cyber range in FY25 to augment cyber incident response capability of banks. It will also augment supervisory capabilities by a suite of supervisory technology data tools on micro-data analytics and other similar use cases using artificial intelligence and machine learning under the Utkarsh 2.0 platform.

Final Framework for the Indian fintech sector’s self-regulatory body released by RBI

RBI has released the final framework for recognising Self-Regulatory Organisations in the Financial Technology sector (SRO-FT). An SRO-FT may have membership from fintechs currently regulated by the RBI, including Non-Banking Financial Companies-Account Aggregators (NBFC-AA), NBFC-peer-to-peer (P2P) lending platforms, among others, excluding banks.

i.A minimum net worth of Rs.2 crore will be required by the applicants within a year of being recognised as an SRO-FT.

ii.The entity should be a not-for-profit company.

iii.The shareholding should not exceed 10 percent or more of the paid-up share capital of an SRO-FT.

Note: An SRO is a non-governmental organisation that acts as a bridge between industry players and the regulator and sets code of conduct for the entities operating in the country.

MSPs ensured minimum return of 50% over cost of production for kharif and rabi crops 

i.The Minimum Support Prices (MSPs) for both Kharif and Rabi seasons 2023-24 ensured a minimum return of 50% over the cost of production for all crops. MSPs in 2023-24 were increased in the range of 5.3-10.4% for the kharif crops and 2.0-7.1% for the rabi crops.

ii.The production of kharif and rabi foodgrains in 2023-24 was 1.3% lower than the final estimates of the 2022-2023.

iii. The overall public stock of foodgrains as on 31st March 2024 stood at 2.9 times the total quarterly buffer norm.

iv.Moong witnessed the maximum MSP increase among kharif crops, while the lentils (masur) and wheat saw the highest rise among rabi crops.

v.The report noted that the agriculture and allied activities faced headwinds from the uneven and deficient South-West Monsoon (SWM) rainfall coinciding with strengthening El Nino conditions.

RBI to facilitate opening rupee accounts outside India 

i.RBI allowed persons resident outside India (PROIs) to open rupee accounts as part of its 2024-25 agenda for globalising the domestic currency. This will allow Indian banks to lend in rupees to the PROIs.

ii.This will boost the use of the rupee and other domestic currencies in the Asian Clearing Union (ACU) mechanism.

iii.The RBI has finalised a strategic action plan for 2024-25 and included liberalisation of external commercial borrowing (ECB) framework and ‘Go-live’ for phase I of software platform for ECBs and trade credits reporting and approval (SPECTRA) project.

RBI and NPCI will expand UPI to 20 countries by FY29

RBI and NPCI International Payments Limited (NIPL), the international arm of the National Payments Corporation of India (NPCI), are working towards expanding UPI to 20 countries by FY29.

Points to note: 

i.UPI payment through QR code is accepted for merchant (e-commerce) payments in France and Nepal.

ii.UPI connectivity between India and Sri Lanka was launched in February 2024, to enable Indian travellers to make QR code-based payments in Sri Lanka.

iii.RBI and Central Bank of the United Arab Emirates (UAE) singed MoU to interlink payments infrastructure. Under this MoU, India’s UPI and UAE’s Instant Payment Platform(IPP) called Aani were linked.

Note: The report also mentions the possibility of collaborating with countries in the European Union and the South Asian Association for Regional Cooperation (SAARC), as well as discovering multilateral linkages for the Fast Payment System (FPS).

RBI’s Greenfield Next-Gen Data Centre to Begin Operations in FY25

RBI has begun a project to build a new state-of-the-art greenfield next-generation data centre to address capacity expansion constraints, meet the increasing IT landscape needs and avoid region-specific risks.

  • The centre, which will commence operation in FY25, will also cater to the internal needs of RBI and its subsidiaries.

Additional info: 

i.RBI is working on upgrading the Indian Financial Network (INFINET 3.0) with better technology, bandwidth and overall services.

ii.It is a closed user group (CUG) network for the exclusive use of member banks and financial institutions. This runs critical payment system applications such as Real-time gross settlement (RTGS), National Electronic Fund Transfer (NEFT) and e-Kuber.

Rs 500 note has become 86.5% of currency in circulation by value 

The share of the Rs 500 note in value terms of the total currency in circulation increased to 86.5% as of March 31, 2024 from 77.1% in March 2023. The increase in the share of the Rs 500 is due to the decline in the share of the Rs 2000 note, which was only 0.2% at the end of FY23.

i.The value and volume of banknotes in circulation rose by 3.9% and 7.8% respectively, during 2023-24 compared with an increase of 7.8% and 4.4% respectively during 2022-23.

ii.The value of the total currency in circulation as of 31st March 2024 stood at Rs 34.8 trillion, up by around Rs 10 trillion in the last 5 years, from Rs 24.21 trillion in March 2020.

About Reserve Bank of India 
It was established on 1st April 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
Governor- Shaktikanta Das
Headquarters- Mumbai, Maharashtra