Reserve Bank of India Governor Sanjay Malhotra | Photocredit: Kunal Patil
The Tarief Panel of the RBI preferred to keep the powder dry, thereby maintaining a status quo on the policy repair percentage, in the midst of benign inflation conditions and probability of risks of growth that comes from long-term geopolitical tensions, rate-related developments and volatility.
Even if the mood of 1 October due to the six-member Monetary Policy Committee (MPC) to keep the repo rate unchanged with 5.50 percent, the central bank announced a large number of measures to stimulate the bank’s credit growth, which has been delayed in FY26 so far.
The decision to continue with the “neutral” monetary policy position was approved by MPC with a majority of 4-2.
The RBI also increased the FY26 GDP growth projection by 30 basic points to 6.8 percent (earlier estimate: 6.5 percent) and reduced the store inflation projection by 50 basic points to 2.6 percent (3.1 percent).
The last rate of MPC was in June 2025, when it reduced the Repo percentage by 50 basic points (BPS) from 6 percent to 5.50 percent and his position changed from “accommodation” into “neutral”. Since February 2025, the Commission has cumulatively reduced the Repo rate so far.
RBI Gouverneur Sanjay Malhotra noted that the views of growth remain resiliently supported by domestic drivers, despite a weak external demand.
The growth will probably get further support from a favorable monsoon, lower inflation, monetary relaxation and the beneficial impact of recent GST reforms. However, the growth remains under the ambitions of RBI.
He noted that although inflation has been a considerable moderation, the prevailing global uncertainties and rate -related developments will probably slow down growth in the second half of FY26 and afterwards.
“The current macroeconomic conditions and the prospects have opened the policy space for further supporting growth. However, the MPC noted that the impact of the pre-loaded monetary policy actions and the recent tax measures are still taking place. The trade-related uncertainties can also be folded,” Malhotra said.
The committee therefore thought it was wise to wait for the impact of policy promotions to play and to get greater clarity before the next course of action is mapped.
Stimulate bank credit flow
To improve the credit stream, the RBI has announced a large number of measures, including plans to offer a possible framework for banks to finance acquisitions by Indian companies and to improve the limit for loans by banks against shares.
In addition, the limit for lending by banks against units of Reit’s (real estate investments), units of Invits (Infrastructure Investment Trusts) will also be improved while the legal ceiling is completely removed over loans against the debt reported.
In addition, RBI will set up a more principles -based framework for loans on the intermediaries capital market.
These movements come in the background of reducing the flow of non-food bank credit to the commercial sector in FY25 and the credit flow of non-banking sources that go up.
The total flow of non-banking sources to the commercial sector has so far increased by £ 2.66 Lakh Crore in FY26, more than compensating for the decrease in non-food bank credit by £ 48,000 crore).
CS Sety, chairman, State Bank of India, said that the RBI policy statement was an authoritative, revealed reforms of the market and went beyond the tariff actions.
“The withdrawal of the framework with regard to specified borrowers and allowing mergers and acquisitions by Indian banks are growth -accretive and will promote the incremental credit flow of banks.” he said.
Published on October 2, 2025
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