Inflation framework review, globalising rupee among RBI’s centenary goals

  • The monetary policy framework was finalised in 2016, following the recommendations of a committee headed by the then RBI deputy governor Urjit Patel. The focus of the framework is flexible inflation targeting with the objective to maintain consumer inflation at 4% with a tolerance of +/-2%.

Gopika Gopakumar
First Published7 Jun 2024, 08:11 PM IST
Among its major goals include a review of the monetary policy framework, capital account liberalization and internationalization of the Indian rupee.
Among its major goals include a review of the monetary policy framework, capital account liberalization and internationalization of the Indian rupee.(Reuters)

Mumbai: The Reserve Bank of India (RBI) on Friday unveiled its aspirational goals for its centenary celebrations in 2034, as it looks to position itself as a "model central bank" and leader of the Global South.

Among its major goals include a review of the monetary policy framework, capital account liberalization and internationalization of the Indian rupee.

Also read: RBI pushes asset reconstruction companies to strengthen KYC compliance

RBI said that as part of its review of the policy framework, it will look at balancing price stability and economic growth from the perspective of an emerging-market economy and also ensure that spillovers from private and public debt overhang in systemically-important economies to emerging-market economies are contained.

Policy Framework

The monetary policy framework was finalised in 2016, following the recommendations of a committee headed by the then RBI deputy governor Urjit Patel. The focus of the framework is flexible inflation targeting with the objective to maintain consumer inflation at 4% with a tolerance of +/-2%. The current inflation target is valid until 31 March 2026.

The Reserve Bank of India was established on 1 April 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The RBI head office was initially set up in Kolkata, but was later permanently moved to Mumbai in 1937. Global South typically refers to regions and countries such as India, Brazil, Mexico, China, Latin America, and Africa that are economically underdeveloped and have a low income.

Also read: India poised for stronger growth over next decade amid AI, climate risks: RBI

Under capital account liberalization, RBI aims to make rupee available to non-residents for facilitating cross-border transactions, ensure accessibility of rupee accounts to persons resident outside India (PROIs) and also promote Indian multinational corporations and Indian global brands through overseas investments.

Financial Globalization

Globalisation of India's financial sector is the other goal that RBI aims to achieve over the next 10 years. It aims to position 3-5 Indian lenders among top 100 global banks in terms of size and operations, deepen and modernise financial markets, and support International Financial Services Centres Authority (IFSCA) to make GIFT City a leading international financial centre.

Also read: Mint Explainer: What does RBI’s record dividend payout to the government mean?

RBI also aims to internationalise payment systems such as UPI, NEFT and RTGS as part of its larger goal of deepening and universalisation of digital payment systems- domestically and globally. It also aims to establish a cost-effective Indian Financial Cloud facility for the financial sector to enhance the security, integrity and privacy of financial sector data.

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First Published:7 Jun 2024, 08:11 PM IST
HomeIndustryBankingInflation framework review, globalising rupee among RBI’s centenary goals

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