New Delhi, June 2025.

RBI Monetary Policy Committee (MPC) has cut Repo rate by 50 bps, significantly higher than estimates. The big change is the stance adopted by RBI. The Reserve Bank has now changed its stance to ‘Neutral.’ Food inflation outlook soft and core inflation outlook benign. The inflation outlook for the year has been revised downwards to 3.7%. GDP growth seen lower amidst global challenges.

Early beginning of Monsoon positive, but global uncertainty continues, said RBI. “Global growth and trade projections have been revised downward. Growth-inflation trade-off becoming more challenging,” explained RBI Governor Sanjay Malhotra. He added that Financial Stability is a big challenge amidst global spillover and tech challenges posed by AI and other innovations.

Shekhar Bhandari, President-SME, Kotak Mahindra Bank Said  “RBI’s 50-bps repo cut and 100-bps CRR reduction have provided a vital liquidity boost to the Indian SME sector. These measures would lower borrowing costs and free up more funds in the banking system, enabling better credit access for small and medium enterprises. In the present economic climate, such steps are essential for supporting working capital needs, and encouraging growth and job creation. For SMEs, which form the backbone of India’s economy, these monetary policy actions can catalyze recovery, foster resilience, and stimulate investment, innovation, and competitiveness across the sector."

Gaura Sengupta, Chief Economist at IDFC First Bank said, “The front loading of the rate cut action plus CRR cut indicates focus is on enhancing the transmission of monetary policy . The neutral stance indicates that the bar for further rate cut is higher but isn’t completely off the table. In the next few policies we expect rbi to remain on pause. The CRR cut, which will infuse liquidity in H2FY26 , will ensure system liquidity remains above the 1%of NDTL till March 2026. The need for further OMO purchases is much lower now.

John Muthoot, Chairman & Managing Director of Muthoot FinCorp Ltd, said, “The reduction in the repo rate and CRR will not only ease the cost of funds but also unlock greater liquidity across the system. At Muthoot FinCorp Ltd, this enables us to extend more affordable and accessible credit solutions to underserved households, first-time borrowers, and micro-entrepreneurs — the real drivers of India’s informal economy. These forward-looking measures align closely with our purpose of transforming the life of the common man by improving their financial well-being. We are confident that such policy support will accelerate demand, enhance financial inclusion, and drive sustainable, broad-based growth across sectors.”