Finance
On Friday, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) maintained the repo rate at 5.25 percent. RBI Governor Sanjay Malhotra announced the decision during the policy meeting.
During its policy meeting on February 4-6, the committee maintained its ‘neutral’ stance.
The latest adjustment comes after a series of pricing cuts last year. Since February 2025, the MPC has reduced the repo rate by a total of 100 basis points (bps) during three consecutive cuts. This reduced the policy rate from 6.5% in February to 5.5% in June. One basis point is equal to one tenth of a percentage point.
RBI MPC: Growth outlook improved
The central bank has raised its growth forecast for FY26 to 7.4 per cent, up from the earlier estimate of 7.3 per cent.
Domestic inflation and growth outlook remain positive, and the Indian economy remains resilient, says Malhotra.
“Amidst global headwinds, private consumption and fixed investment supported growth. Net external demand, however, remained a drag, with imports outpacing exports. On the supply side, growth in real GVA, on the back of a strong contribution from the services sector and revival in manufacturing activity, is estimated at 7.3 per cent in 2025-26,” the RBI Governor said.
RBI MPC: Inflation forecast
“Headline CPI inflation remained low in November and December even as it firmed up by one percentage point in these two months. This increase was largely driven by the lower rate of deflation in the food group. Excluding gold, core inflation remained stable at 2.6 per cent in December,” the RBI Governor said.
The MPC revised its inflation forecast from 2 per cent to 2.1 per cent. The quarterly inflation forecasts are:
“Improving corporate sector performance and sustained momentum should boost manufacturing activity. High capacity utilisation, supportive financial conditions, and government focus on infrastructure expected to spur investments,” said Malhotra.
The next meeting of the MPC is scheduled from April 6 to 8.
Home loan EMIs to remain unchanged
Home loan customers are unlikely to witness an immediate change in their EMIs after the Reserve Bank of India (RBI) opted to maintain the repo rate at 5.25 percent. With policy rates on hold, lending rates are projected to remain constant in the near future.
According to industry experts, now is a better time for borrowers to analyze and fine-tune their existing home loans than to wait for future rate reduction.
RBI moves to boost customer protection
The RBI outlined various initiatives to increase client protection, digital payment security, and prevent financial product mis-selling.
Malhotra stated that the central bank will announce three draft rules on mis-selling of financial goods, loan recovery and the role of recovery agencies, and customer liability limits in unauthorized electronic banking activities.
The RBI has also proposed a framework for compensating clients for losses incurred by low-value frauds. Customers eligible under the plan can receive up to ₹25,000 in compensation.
The RBI has examined significant financial inclusion programs like as the Lead Bank Scheme, the Kisan Credit Card, and the Business Correspondent Model. Revised draft rules will be published, along with a uniform site to improve data reporting.
Source: BS
