State Bank of India (SBI) Chairman CS Setty said the decision to cut interest rates while keeping the door open for further easing will protect the economy from unexpected shocks or external headwinds. “This move strengthens the structural drivers of a ‘higher-for-longer’ growth trajectory in investment, credit and consumption,” he said.
He added that simultaneous liquidity management steps are aimed at anchoring money market rates and reducing financing costs. “Together, the interest rate cut, neutral stance and targeted liquidity interventions aim to maintain economic momentum while safeguarding price and financial stability.”
Housing, MSMes win
Indian Overseas Bank MD & CEO Ajay Kumar Srivastava said the rate cut is expected to ease borrowing costs, boost demand for housing and real estate, support MSMEs and support the growth of personal and auto loans.
“Bank credit growth remains healthy at 11 per cent, and total lending from banks and non-bank sources has grown 13.1 per cent. RBI’s ₹1 lakh crore OMO purchases and three-year USD/INR buy-sell swap will support liquidity and monetary transmission. These steps will encourage domestic investment and deepen financial access,” he said.
long term exchange
Manappuram Finance MD and Chairman VP Nandakumar noted that with price pressures stabilizing and liquidity improving, the move is aimed at boosting consumption and investment at a time when growth momentum has waned. Lower policy rates generally reduce financing costs for home loans, cars, SME loans and working capital financing, allowing households and small businesses to manage cash flows more comfortably, although full transmission may take several weeks.
He added that the introduction of the three-year rupee-dollar sales swap adds an additional layer of support. “By providing longer-term liquidity without disrupting short-term rates, the RBI is ensuring that banks have room to borrow more comfortably. This should help further reduce borrowing costs and improve liquidity conditions for both consumers and small businesses.”
“From a broader economic perspective, the cut reinforces the pro-growth environment. Bond yields are generally softening, credit demand is improving, and sectors that are heavily dependent on financing – such as real estate, autos and NBFCs – will benefit from lower EMIs and better lending conditions,” he said.
Published on December 5, 2025
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