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Informist, Wednesday, Oct. 1, 2025

 

MUMBAI – Following is a compilation of first views of economists and market experts on the Reserve Bank of India's fourth bi-monthly monetary policy statement for 2025-26 (Apr-Mar) detailed on Wednesday:

 

BANKERS

 
VINOD FRANCIS, GENERAL MANAGER AND CHIEF FINANCIAL OFFICER, SOUTH INDIAN BANK

In my opinion, it was macro-prudential for the RBI Monetary Policy Committee to hold key policy rates unchanged and deferring the rate cut call till its next meeting in December. This wait-and-watch policy is a sound strategy since it gives ample time and space for the committee to have clarity about transmission from the earlier frontloaded rate cut and how goods and services tax rationalisation shapes the inflation trajectory.

 

This caution is warranted in the wake of changing growth-inflation dynamics and growing haze on exports. On the regulatory side, the expected credit loss framework, to be implemented in phases, is a welcome move as it will improve the risk management of banks by recognising stress much in advance. This indeed will make financial reporting standards more transparent. 

(Adhithya Aji)

 

AJAY KUMAR SRIVASTAVA, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, INDIAN OVERSEAS BANK

We welcome the RBI's decision to maintain the repo rate at 5.50% with a neutral stance as this reflects a balanced approach in supporting growth and ensuring price stability. With inflation under control, aided by easing of food prices and GST rationalisation, the upward revision of GDP growth to 6.8% for FY26 showcases resilience of the Indian economy despite global volatility.

 

For the banking sector, measures set towards regulatory initiatives such as proposed risk-based deposit insurance premiums, easing of risk weights for MSME and residential real estate lending, and enabling framework for corporate acquisition and capital market financing is expected to further increase credit flow in the market and promote inclusive growth.

 

Furthermore, the focus on expanding bouquet of services for basic bank savings deposit accounts through mobile and internet services will also have positive impact on consumers. At Indian Overseas Bank, we are positive that all these measures will further boost domestic demand while aligning itself to the Viksit Bharat goal. 

(Durva A. Shivalkar)

 

PRALAY MONDAL, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, CSB BANK

A very prudent policy in the uncertain global scenario. The slew of measures announced by RBI of giving more power to bank boards, bringing global best practices through ECL (Expected Credit Loss) and Basel 3 norms, differential premium on deposits, removing large framework restriction in an era of growing companies and economy including acquisition financing, giving more legroom to exporters and enabling individuals to leverage their equity assets, augurs well for the economy. 

(Arundathi A R)

 

SALEE S. NAIR, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, TAMILNAD MERCANTILE BANK

The RBI's decision to maintain the repo rate at 5.50% reflects a commitment to stability while nurturing growth. At Tamilnad Mercantile Bank, we align our strategy closely with this vision balancing prudence with proactive credit expansion to support India's economic momentum. As the festival season gathers pace, we anticipate a natural rise in economic activity.

 

Gold loans, particularly during Dhanteras, will see heightened demand, providing households with easy liquidity. At the same time, auto loans across two-wheelers, commercial vehicles, and electric vehicles are poised for strong traction, reflecting rising mobility aspirations. For businesses, GST rationalisation and improved consumption are likely to drive higher working capital requirements, particularly among MSMEs and traders.

 

To fund this responsibly, we continue to focus on deposit mobilisation, ensuring that credit growth remains sustainable. But the larger transformation is through digitisation. In line with RBI and government efforts to expand digital penetration, Tamilnad Mercantile Bank is investing in mobile-first platforms, data analytics, and faster onboarding solutions. This ensures last-mile connectivity, quicker loan disbursals, and a seamless banking experience, even in semi-urban and rural areas.

 

By aligning our growth priorities with RBI's vision, we aim to drive inclusive, technology-led banking that strengthens both customer confidence and India's long-term growth story.  

(Eshitva Praksh)

 

V.R.C. REDDY, HEAD OF TREASURY, KARUR VYSYA BANK

The MPC's decision to pause rates and maintain a neutral stance was broadly in line with market expectations, though a section of economists had anticipated a 25-basis point cut. This outcome reflects a cautious pause with dovish undertones, acknowledging softer inflation trends, while balancing a modest downward revision in H2 growth against the full-year upward revision.

 

Importantly, the policy signals that the space is opening up for further easing, with (the) December and February reviews hinging on incoming data. The divergence of views around retaining a neutral stance further underscores the possibility of a policy shift in the coming meetings.

 

From a structural standpoint, the announced reforms, including revised lending norms for banks, easing in capital market lending, implementation of the ECL framework, and adoption of risk-based deposit insurance, are positive, especially for PSU banks and top-rated private banks. However, weaker institutions may face higher costs due to risk-profile-based premiums.

 

Overall, while the outcome matched trader expectations, the next move could align more closely with economist forecasts of easing. Despite the softer macro conditions, bond yields remain sticky, driven largely by demand-supply imbalances and higher state bond auctions. Going forward, the rates market will keenly track data, with the tilt leaning towards yield softening from current levels. 

(Eshitva Prakash)

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ECONOMISTS

 

DHARMAKIRTI JOSHI, CHIEF ECONOMIST, CRISIL

Contrary to our expectation of another cut in the repo rate, the Monetary Policy Committee of the Reserve Bank of India has preferred to stay put, even as inflation has declined more rapidly than anticipated.

The MPC has revised its inflation forecast downward by 50 basis points (bps) to 2.6%, while increasing the GDP forecast by 30 bps to 6.8%.

Mint Road perceives risks around its growth projections to be balanced, affording it the elbowroom to wait and watch, given incomplete transmission of the previous policy rate reductions and lingering global uncertainties. Apart from monitoring transmission, it is keeping an eye on the ongoing cash reserve ratio cuts. 

Several factors remain conductive for further monetary policy facilitation:

* India's gross domestic product growth is projected to slow in the latter half of this fiscal as the impact of higher US tariffs manifests, and a global economic slowdown becomes evident. This is despite the support to consumption from direct and indirect tax cuts. If the US continues with the higher tariff levels, India's exports will face challenges in the second half.

* Inflation is expected to remain low this fiscal, with the Consumer Price Index-based gauge averaging 2.4% and the Wholesale Price Index-based print at 0.1% in the first five months of this fiscal. The MPC has brought down its inflation forecast for this fiscal to 2.6% and trimmed for the first quarter next fiscal.

* China's excess capacity and low prices are contributing to disinflation in other economies, a trend likely to continue in the near term. Crude oil prices, too, are projected to remain soft.

* The US Federal Reserve's decision in September to lower its funds rate by 25 bps, and the expectation of further such moves, lends the MPC greater flexibility to consider further reduction in the repo rate.

Given the turbulent times, fiscal and monetary authorities need to keep eyes peeled on exports, particularly from sectors that are employment-intensive and dominated by MSMEs. 

(Durva A. Shivalkar)

 

ANITHA RANGAN, CHIEF ECONOMIST, RBL BANK

A key takeaway is governor's mention that there is "policy space open to support growth further" but trade related uncertainty is unfolding and need to watch impact of policy actions playout.

 

Another key takeaway is the plethora of measures to boost credit growth amidst easing foreign exchange rules, infra financing, new universal bank licencing draft, internationalisation of rupee, easing limits for lending against shares and other financial instruments amidst others. Overall, the policy has a strong tilt to support growth via other measures while noting that rate cuts will happen down the road. No new liquidity measures announced with 75 basis point of cash reserve ratio cut underway and government cash balances improve. Furthermore, governor noting that underlying credit growth even if soft, overall flow of financial resources remains robust indicates that RBI is looking to support the flow of financial resources – banking or otherwise, which in itself is dovish.

 

In summary, the policy was more than rates. RBI's message is growth support can come from other sources as well. 

(Janwee Prajapati)

 

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK

In line with our expectations, the MPC has delivered a dovish pause across rates and stance. The growth risks from tariff uncertainties have created room for additional rate cuts if risks materialise. We see scope for 25-50 basis points rate cuts in rest of FY26.

(Rati Chaphekar)

 

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FUND MANAGERS

 

ABHISHEK BISEN, HEAD – FIXED INCOME, KOTAK MAHINDRA ASSET MANAGEMENT CO.

In line with majority expectation, RBI chose to hold on policy rates with unanimous vote by all members in its MPC meeting of Oct'25 (October 2025). MPC have kept the stance also unchanged at neutral, however, two external members voted for stance change to accommodative. RBI Governor further guided that space for monetary easing is available given the drop in inflation due to GST cut and growth below aspiration. MPC wants to watch out on the global developments and impact of GST rationalisation on domestic growth. RBI has revised projections for FY26 GDP growth higher to 6.8% (from 6.5% in Aug'25) and revised FY26 headline inflation down to 2.6% (from 3.1% in Aug'25) on the back of GST rate cuts. Projection for headline inflation for Q1FY27 has also been revised lower to 4.50% from 4.90% projected in Aug'25. Market has read the policy as a neutral to dovish. We expect RBI to ease policy rates by 25 bps in the next MPC meeting. 

(Akshat Saksena)

 

AVNISH JAIN, HEAD FIXED INCOME, CANARA ROBECO ASSET MANAGEMENT CO.

The outcome of the RBI Monetary Policy Committee meeting was on expected lines with RBI-MPC maintaining status quo on rate at 5.5% as well as stance at "neutral", though two members voted for stance to change from neutral to accommodative. However, the policy commentary was dovish, with the RBI governor noting that with CPI headline inflation falling more than anticipated coupled with GST reforms, is likely to have a "sobering impact" on inflation, and risks to growth from US tariffs, opens policy space for supporting growth, though the MPC members would like to wait and watch the full impact of the 100-bps cut before taking any further action. CPI inflation projection for FY26 was reduced to 2.6% from 3.1% in last meeting in August. Growth projections were raised upwards to 6.8% for FY26 from 6.5% in the previous meeting. The governor noted that liquidity conditions remained surplus with average liquidity adjustment facility absorption of INR 2.1 trillion since last policy meet in August and the cash reserve ratio cut is likely to further bolster liquidity in the system.  

(Arundathi AR)

 

NURAG MITTAL, HEAD OF FIXED INCOME, UTI ASSET MANAGEMENT CO.

The RBI delivered the best hope for the bond market today (Wednesday). RBI acknowledged the considerable change of inflation expectations and emerging policy space to cut further. We believe RBI can cut policy rates by 25-50 bps in the upcoming policies depending on growth-inflation dynamics. Given the easy liquidity and possible (possibility) of further rate cuts, we believe short to medium end of the yield curve remains best placed. 

(Arundathi A R)

 

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OTHERS

 

NAVAL KAGALWALA, CHIEF OPERATING OFFICER AND PRODUCT HEAD, SHRIRAM WEALTH LTD. 

The RBI-led MPC unanimously maintained the policy rates, while also continuing with a neutral policy stance (though two external members voted to change the stance to accommodative). 

 

The inflation outlook was classified as more benign, given a sharper-than-expected fall in food prices, improved supply conditions, GST rationalisation, with core inflation also expected to remain contained. The FY26 headline inflation was revised to 2.6% (from 3.1% as per August MPC meeting), helped by satisfactory southwest monsoon, comfortable buffer stocks, good progress of kharif sowing and adequate water reservoir levels. The real GDP growth for the ongoing financial year was revised to 6.8% from 6.5?rlier - aided by brightened prospects of agriculture, rising capacity utilisation, conducive financial conditions, with recent GST announcements said to enhance consumption.  

 

The governor acknowledged deterioration in external environment given the ongoing tariffs and trade policy uncertainties but reiterated confidence around meeting external obligations. Concern around recent depreciation of the rupee was also noted, with governor assuring of taking appropriate steps as warranted. The statement noted policy transmission across sectors, with further support likely from improvement in liquidity conditions from drawdown in GOI (Government of India) cash balances and durable liquidity injection from CRR cuts.  

 

While there was no clear guidance on roadmap for policy easing, the committee emphasised to wait for the impact of policy actions along with greater clarity around trade-related uncertainties before charting the next course of action.  However, the statement also noted that the current macroeconomic conditions had opened up policy space for further supporting growth - hinting at policy easing in any of the forthcoming meetings.  

(Adhithya Aji)

 

APURVA SHETH, HEAD OF MARKET PERSPECTIVES AND RESEARCH, SAMCO SECURITIES

The RBI's decision to hold the repo rate at 5.50% while lowering its inflation projection to 2.6% for FY26 is a clear positive for the Indian economy. With (GDP) growth estimates revised upward to 6.8%, the policy indicates a stable macro backdrop where inflation is under control and growth drivers remain intact.

 

Additional key measures including easier credit access, regulatory reforms, and steps to internationalise the rupee, reflect a proactive stance towards sustaining momentum. For markets, this outcome is constructive - stable rates and soft inflation support bond yields, while a stronger growth outlook is positive for equities.

 

The rupee may also see greater stability backed by robust forex reserves and resilient external fundamentals where the announcement for internationalisation of the currency will act as major tailwinds. Overall, the policy strengthens confidence that India can balance growth and stability, making the outlook favourable for investors across asset classes. 

(Durva A. Shivalkar)

 

RISHI ANAND, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, AADHAR HOUSING FINANCE

The RBI's decision to maintain the repo rate at 5.5% reinforces stability at a time when India's macroeconomic landscape is evolving rapidly. With inflation coming down to 2.6% and growth revised up at 6.8%, the outlook is positive for both borrowers and lenders. For the affordable housing sector, this provides a dual advantage, with credit costs remaining stable even as household purchasing power strengthens amid moderate inflation and lower GST rates on essential commodities.

 

A neutral policy stance, combined with structural reforms such as GST simplification and ongoing government initiatives like PMAY 2.0, will further expand credit penetration and improve housing affordability across Bharat.

(Adhithya Aji) 

 

CHURCHIL BHATT, EXECUTIVE VICE PRESIDENT–INVESTMENT, KOTAK MAHINDRA LIFE INSURANCE CO.

The MPC today (Wednesday) delivered a dovish pause in policy rates, acknowledging fast-changing growth-inflation dynamics. Average Inflation for FY26 was revised lower to 2.6% from an already low level of 3.1%. While full year GDP has been revised up by 30 bps, the forward-looking projections for Q3 and beyond are expected to be slightly lower than projected earlier. This, according to the MPC, has opened up some space for monetary easing, as they await the impact of their past actions to play out. We expect this rhetoric to be perceived as relatively dovish compared to the MPC's earlier messaging, thereby capping any rise in government bond yields. Market will keenly track incoming economic data to evaluate future trajectory of policy rates. We assign high probability to one more rate cut in this easing cycle going forward.

(Eshitva Prakash)

End

 

Compiled by Shaheed Shaikh

Filed by Tanima Banerjee

 

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