RBI’s 25 Basis-Point Repo Rate Cut Garners Positive Industry Response

V P Nandakumar, MD & Chairman, Manappuram Finance LTD.
"The RBI’s 25-basis-point rate cut, which brings the repo rate down to 5.25%, comes at a time when inflation is easing and the broader economy needs a little more support. With price pressures gradually stabilising and liquidity improving, the move aims to lift consumption and investment at a moment when the growth momentum has moderated. Lower policy rates usually work their way into borrowing costs across home loans, autos, MSME credit and working-capital financing, helping households and small businesses manage their cash flows more comfortably, even though the full transmission will take a few weeks.
The introduction of the three-year rupee-dollar sell swap adds another layer of support. By infusing longer-term liquidity without unsettling short-term rates, the RBI is ensuring that banks have the room to lend more comfortably. This should help lower funding costs further and improve liquidity conditions for both consumers and small businesses.
From a wider economic standpoint, the cut strengthens the pro-growth environment. Bond yields typically soften, credit demand tends to improve and sectors that rely heavily on financing—such as real estate, autos and NBFCs—benefit from lower EMIs and better borrowing conditions. Savers may see deposit rates adjust downward, but that is part of the broader cycle as the financial system aligns with lower benchmark rates. 
Overall, the RBI’s decision is a measured and timely step. With inflation trending toward the comfort zone and certain parts of the economy still operating below capacity, this rate cut helps reinforce confidence and supports a steady, broad-based recovery as the country moves into FY27."

Abhinav Jain, Whole-Time Director of Jinkushal Industries Limited
“The RBI’s latest policy signals a decisive shift toward supporting growth while maintaining macroeconomic stability. For a net forex-earning business like JKIPL, a stronger export environment, lower real interest rates and a more competitive rupee together create a significant tailwind. Every dollar of revenue now translates into higher rupee realizations. For instance, a standard USD 100,000 export invoice yielded about ₹83 lakh in December 2024; at current levels it realizes nearly ₹90 lakh, a gain of roughly ₹7 lakh per invoice. This directly strengthens our margins and enables greater reinvestment in technology, refurbishment quality and expanding our global reach.
Our cost base in India spanning refurbishment, logistics, compliance and central functions is largely rupee-denominated, while a substantial share of our revenues is in dollars. In this environment, disciplined risk management and selective hedging help us turn currency volatility into an advantage rather than a risk. We intend to use this window to deepen relationships with existing buyers, enter new geographies and continue operating with a conservative balance sheet.”

Mahek Modi, Whole-Time Director & CFO of Modis Navnirman Limited
“The RBI’s decision to reduce the repo rate by 25 basis points to 5.25% comes at an opportune moment for the real estate sector and the broader economy. With inflation easing and credit flows improving, this policy move strengthens affordability and further reinforces homebuyer confidence as we step into 2026. The cumulative rate cuts over the past year have already improved sentiment across mid-income and premium segments, and this additional easing is expected to accelerate purchase decisions that were previously deferred due to elevated price pressures.
Backed by robust demand trends in key metros and a rising preference for quality living, we anticipate sustained traction across both residential and commercial categories. Lower mortgage rates, combined with stable macroeconomic indicators, will not only support end-users but also enable developers to plan future launches with greater clarity. Overall, this calibrated monetary stance by the RBI sets a positive tone for continued sectoral growth and positions the real estate market for a strong 2026.”
 

Ajay Kumar Srivastava, Managing Director and CEO, Indian Overseas Bank
“We welcome the RBI’s decision to reduce the repo rate by 25 basis points to 5.25 per cent while maintaining a neutral stance. This policy supports growth while keeping inflation at or below the 4 per cent target, with real GDP expected at 7.3 per cent for 2025-26 (Q3 at 7.0 per cent; Q4 at 6.5 per cent; Q1 2026-27 at 6.7 per cent and Q2 at 6.8 per cent). The rate cut is expected to ease borrowing costs, spur demand in housing and real estate, support MSMEs and sustain personal and auto loan growth.
On the financial sector side, bank credit growth remains healthy at 11 per cent and overall credit from bank and non-bank sources has risen by 13.1 per cent. The RBI’s ₹1 lakh crore OMO purchases along with the 3-year USD/INR buy-sell swap will support liquidity and monetary transmission. These measures will encourage domestic investment and deepen financial access.
We appreciate the RBI’s two-month drive beginning January 1 to address pending Ombudsman complaints, which will further strengthen customer service across the banking system. At Indian Overseas Bank, we remain committed to passing on policy benefits swiftly to customers and supporting inclusive national growth.”

Dr. Poonam Tandon, Chief Investment Officer at IndiaFirst Life
“The MPC cut rates by 25bps and announced liquidity infusion measures - Rs. 1tn of OMO and a 3-year US$5bn FX swap. The rate cut was a unanimous decision while the stance was maintained as neutral. The rationale was that growth is expected to soften somewhat while headline and core inflation is expected to be below 4% in 1HF27. The rate cut and liquidity infusion measures will help softening of bond yields as well as aid credit flow. In all it was a balanced policy with the much-required liquidity infusion”
 

Srinivasan Vaidyanathan, Operating Partner, Essar Capital
"The RBI’s rate cut to 5.25% reinforces confidence in India’s growth trajectory and strengthens sentiment across capital markets. With GDP now projected at 7.3% and liquidity-boosting measures announced, the policy creates a favourable environment for both domestic and foreign investors to deploy capital into India’s long-term growth sectors. Lower borrowing costs and macro stability will further accelerate private investment, even as global uncertainties persist."
 
Pankaj Kalra, CEO, Essar Oil and Gas Exploration and Production Limited
"The RBI’s 25 bps rate cut and neutral stance strengthen confidence in India’s economic momentum. A stronger growth outlook and supportive financial conditions will enable the energy sector to invest more confidently in domestic capacity and cleaner fuels. This policy stability reinforces India’s path toward a more secure and sustainable energy future."
 

Ashish Rajgarhia, Executive Director, Essar Ports
"The RBI’s rate cut provides timely support for India’s infrastructure and logistics ecosystem. With stronger growth projections and improved financing conditions, there is now an even greater momentum to accelerate development, enhance efficiency, and strengthen connectivity across the country’s supply chains."

Lakshmanan V, GROUP PRESIDENT & HEAD - TREASURY (TREASURER), Federal Bank 
"The MPC has in a platter given what the market expected. A Rate cut alongside long dated Swaps and OMOs, not only keeps the liquidity promise intact, but also will keep the Currency in relative balance. The market appears to have reacted positively on all counts."

Vinod Francis, GM & CFO, South Indian Bank 
“The RBI’s decision to trim the repo rate by 25 basis points while maintaining a neutral stance signals a calibrated shift towards supporting growth, without sending an overly aggressive easing signal to the markets. RBI’s communication is straight forward that the apex will do whatever it takes to support growth given the deflationary trend in the price gauge.”
“By combining a modest rate cut with a neutral stance, the MPC has tried to balance softening inflation with still-resilient growth.  This in my view is necessitated by the weakening Rupee and narrowing interest rate spread between India and the US markets.”

Dr. K. Paul Thomas, ESAF Small Finance Bank 
“The RBI MPC's 25 bps repo rate reduction, paired with a neutral stance, reflects a data-dependent approach that prioritises supporting growth against the backdrop of easing inflationary pressures.  However, the rate-setting panel has retained its flexibility for future policy decisions based on incoming data."

Ashwani Dhanawat, Executive Director & Chief Investment Officer, Shriram General Insurance.
“The Reserve Bank of India’s Monetary Policy Committee (MPC), under Governor Sanjay Malhotra, has concluded its December 2025 review with a measured yet anticipated step forward. In line with market expectations, the repo rate has been reduced by 25 basis points to 5.25%, marking the fourth cut in the easing cycle this year (totaling 125 bps). This adjustment reflects the MPC’s confidence in sustained disinflation, while maintaining a neutral policy stance to support robust economic momentum.”

 Vinod Francis, GM & CFO, South Indian Bank.
“The RBI’s decision to trim the repo rate by 25 basis points while maintaining a neutral stance signals a calibrated shift towards supporting growth, without sending an overly aggressive easing signal to the markets. RBI’s communication is straight forward that the apex will do whatever it takes to support growth given the deflationary trend in the price gauge.
By combining a modest rate cut with a neutral stance, the MPC has tried to balance softening inflation with still-resilient growth.  This in my view is necessitated by the weakening Rupee and narrowing interest rate spread between India and the US markets.”

Vikas Bhasin, Managing Director, Saya Group
“The RBI’s 25 bps rate cut is a timely boost for the economy and a clear signal of easing financial conditions. For borrowers, this translates into lower EMIs and improved liquidity, while for homebuyers it significantly enhances affordability and purchasing power. With borrowing costs easing, we expect renewed momentum in housing demand, particularly in the mid-income and first-time buyer segments.”

Sumit Agarwal, Director, Ashtech Group
“The 25 bps rate cut is a welcome boost for borrowers as it directly reduces EMI pressure and improves overall loan affordability. Home loan rates, which had climbed above 9% early last year, are now already below 7.5%. With this cut, we expect rates to move closer to the 7%–7.25% range—an attractive window for homebuyers. Lower interest outflow can often be the deciding factor between planning a purchase and finally making one. This decisive move by the RBI will uplift consumer confidence and stimulate demand across major housing markets.”

Dharmakirti Joshi, Chief Economist, Crisil Ltd
“In line with our expectations, the Monetary Policy Committee (MPC) of the Reserve Bank of India has cut the repo rate by 25 basis points.
The accompanying liquidity-enhancing measures, including open market purchases and forex swaps, underscore the growth-supportive nature of this policy decision.
This fiscal, economic data has surprised on both growth and inflation fronts, creating elbow room for the rate cut. Real gross domestic product (GDP) growth has surpassed expectations, reaching 8% in the first half of this fiscal, while retail inflation has decelerated sharply.
The drop in headline inflation below the lower end of the RBI's target range of 2-6% has been driven by food inflation, with fuel inflation also subdued. Core inflation, excluding gold, was 2.6% in October, aided by goods and services tax (GST) cuts, indicating absence of excess demand pressure. Excess supply-chain capacity globally, particularly in China, also suggests limited upward pressure on goods inflation.
The repo rate cut is expected to support growth next fiscal, as monetary policy typically has a lagged effect. Today’s liquidity-enhancing measures will also help transmit the policy rate cut to broader market interest rates. 
We forecast India’s GDP growth at 7% this fiscal, following an expected slowdown to 6.1% in the second half due to higher United States tariffs and normalisation of government capital expenditure. Next fiscal, we expect GDP to grow a healthy 6.7%.
We project inflation to remain benign at 2.5% this fiscal but rise to 5% next fiscal largely due to a statistical low-base effect.”

 Ritesh Taksali, Chief Investment Officer, Edelweiss Life Insurance
“The MPC policy has firmly supported growth, cutting the repo rate by 25 bps as inflation has cooled off and is expected to remain benign over the next year. The RBI has also decided to infuse liquidity via OMOs and FX swaps as dollar outflows and currency defence drains liquidity from the banking system. RBI's dovish pivot is required to support yields which have remained under pressure. Structurally, with a rare goldilocks scenario cited by the Governor, we could expect stable macroeconomic conditions.”

Samir Jasuja, Founder & CEO, PropEquity
“The RBI’s continued reduction in the repo rate is a welcome move, especially in the backdrop of easing inflation and strong GDP growth. Lower borrowing costs provides a cushion to homebuyers against rising property prices thereby accelerating decision-making among fence-sitters.
Developers, too, are responding to this evolving demand landscape. A noticeable increase in new launches within the ₹2–5 crore segment indicates strategic alignment with buyer preferences. This segment, in particular, stands to benefit significantly from the consistent reduction in home loan rates, which is likely to further support real estate momentum.
Overall, the policy move is poised to give a strong fillip to volume-led sales across key geographies, reinforcing growth and confidence across the real estate ecosystem.”

Shilpa Bhatter, Chief Financial Officer, UGRO Capital.
“The RBI’s 25 bps rate cut to 5.25% and the sharply revised inflation outlook create a supportive environment for credit expansion. With headline CPI now projected at just 2% for FY26 and core inflation continuing to ease, the policy clearly signals confidence in domestic price stability. The liquidity measures through OMOs and the USD/INR swap will further soften funding conditions, which is positive for NBFCs and will enhance the flow of credit to MSMEs. The neutral stance gives the RBI flexibility to respond to incoming data while sustaining the growth momentum. Overall, this policy reinforces a healthy credit environment and strengthens the demand outlook across key MSME segments we serve.”

Dr. Samantak Das, Chief Economist and Head – Research and REIS, India, JLL
“The RBI's decision to cut the repo rate by 25 bps is a powerful, proactive signal that strategically leverages India's macroeconomic strength – a robust 8.2% Q2 GDP expansion alongside record-low headline inflation. This is not a reactive measure to a slowdown, but a confident and forward-looking deployment of monetary space to deliver a structural stimulus, ensuring the nation's growth engine becomes more inclusive.
For the residential sector, this is a direct boost to affordability which has been a growing concern amid rising property prices. We have been observing price resistance in the affordable and mid-segment housing categories, with our estimates projecting residential sales in 2025 to be 8-9% down from last year's robust 300,000+ units (in the top seven markets of India). Given the high penetration of external benchmark-linked loans, the transmission to homebuyers is expected to be quick, providing tangible EMI relief that directly addresses this affordability challenge. This move is the catalyst needed to revive purchasing power and activate the crucial segment of first-time affordable and mid-market homebuyers who have been waiting on the sidelines, transforming fence-sitters into active buyers. We anticipate this will not only invigorate demand in the top metro areas but also significantly boost the burgeoning housing markets in Tier 2 and Tier 3 cities.
For developers, this final easing bullet significantly lowers the cost of capital, encouraging accelerated execution of planned inventory, particularly in the affordable housing segment. This ensures that 2026 kicks off with renewed, broad-based residential momentum. On the commercial front, the lower cost of capital for developers encourages faster project completions and new launches. This aligns perfectly with the unabated expansion of Global Capability Centres (GCCs) and the government's 'Make in India' initiative, ensuring supply can meet the high-velocity demand. Ultimately, this move underwrites a confidence-driven surge in real estate activity and enhances the long-term investment potential of the asset class for both domestic and global players.”