RBI: No proposal to replace face of Mahatma Gandhi on banknotes

Dismissing reports, the Reserve Bank on Monday said there is no proposal to replace the face of Mahatma Gandhi with that of others on currency notes.

In a statement, the central bank said there are reports in certain sections of the media that the Reserve Bank of India is considering changes to the existing currency and banknotes by replacing the face of Mahatma Gandhi with that of others.

"It may be noted that there is no such proposal in the Reserve Bank," it said.

There were certain reports suggesting the finance ministry and the RBI were contemplating to use the faces of other prominent Indians, including Rabindranath Tagore and APJ Abdul Kalam, on banknotes of certain denominations.

Meanwhile, RBI's rate-setting panel MPC on Monday began its three-day deliberation amid expectations of another round of hike in benchmark interest rates to contain inflation that continues to remain above the central bank's upper tolerance level.

RBI Governor Shaktikanta Das will announce the decision of the Monetary Policy Committee after deliberations on Wednesday.

Das has already indicated that there may another hike in the repo rate, though he refrained from quantifying it.

There are speculations that the central bank may go for at least 35 basis points (bps) hike over and above the 40 bps hike effected last month after an off-cycle MPC meeting.

Market experts are estimating a bigger hike in interest rate as consumer price index (CPI) based retail inflation, which the Reserve Bank of India factors in while arriving at its monetary policy, galloped for a seventh straight month to touch an 8-year high of 7.79 per cent in April.

Inflation is rising mainly on account of surging commodity prices, including fuel. The ongoing Russia-Ukraine war has further pushed up commodity prices across the globe.

The wholesale price-based inflation has remained in double digits for 13 months and touched a record high of 15.08 per cent in April.

Stressing that a "back-to-back rate hike is imminent in June policy", SBI's Economic Research Department in a report said during 2022 so far, more than 45 central banks across AEs and EMEs have raised policy interest rates and/or scaled back liquidity, with many central banks hiked interest rates in back-to-back policies.

On expectations from the MPC Shanti Ekambaram, Group President, Consumer Banking, Kotak Mahindra Bank, said the MPC has signalled a gradual withdrawal of accommodation in light of higher inflation.

"I expect a rate hike between 35-50 basis points in the June policy. Based on inflation data and external factors, including oil and commodity prices, expect a total of 100 to 150 bps increase in repo rate from the current 4.4 per cent," she said.

V Swaminathan, Executive Chairman, Andromeda and Apnapaisa, said it is being anticipated that by the end of the current financial year, the RBI can hike the repo rate up to 5.6 per cent.

The government has tasked the Reserve Bank to ensure consumer price index-based inflation remains at 4 per cent with a margin of two per cent on either side.

Last month, the MPC raised the key policy rate (repo) by 40 basis points to 4.4 per cent to tame the rising inflation. It was the first-rate hike after August 2018.

(with agency inputs)