The Reserve Bank of India (RBI) on Wednesday left the repo rate unchanged at 5.5%, with Governor Sanjay Malhotra announcing that the Monetary Policy Committee (MPC) has decided to maintain a &lsquo;neutral&rsquo; stance. This marks the second consecutive pause, following three earlier cuts totaling 100 basis points this year that brought down the rate from 6.5%.
The decision comes against the backdrop of fresh GST reforms, which have reduced taxes on essential commodities, and new tariffs by US President Donald Trump, creating uncertainty in global trade.
Capital Market Lending Liberalisation
While the pause was widely expected, the real headline came in the form of a liberalisation of capital market lending norms. The RBI raised prudential limits on loans against shares, IPO financing, listed debt instruments, and gave banks more room for acquisition funding.
&ldquo;This dovish pause leaves room for further accommodation if inflation rises. The liberalisation of capital market lending is a key positive, allowing banks to recapture flows moving to structured credit players,&rdquo; said Chanchal Agarwal, CIO, Equirus Family Office.
Credit Expansion for 'Viksit Bharat' 
In a move aligned with the &lsquo;Viksit Bharat&rsquo; agenda, RBI also announced measures to expand the role of Urban Cooperative Banks and deepen credit intermediation. Officials stressed this would improve access to credit in semi-urban and rural markets, aiding financial inclusion.
Inflation &amp; Market Reaction 
Consumer Price Index (CPI) inflation continues to show signs of moderation. Still, bond markets reacted cautiously, with the 10-year benchmark yield rising to 6.6% after the policy announcement. Analysts believe the RBI may deliver one more rate cut, possibly taking the terminal repo rate to 5.25%, depending on inflation trends and global monetary cues.
Balancing Growth and Stability 
With India navigating lower GST rates, US tariff pressures, and the H-1B visa fee hike, the central bank has opted for stability over aggressive easing. The focus now shifts to how credit liberalisation and cooperative banking reforms will spur growth while keeping inflation anchored.

RBI Holds Repo Rate at 5.5%, Focus on Credit Push

Policy stance stays ‘neutral’ as GST reforms, US tariffs weigh on outlook

RBI Holds Repo Rate at 5.5%, Focus on Credit Push

Policy stance stays ‘neutral’ as GST reforms, US tariffs weigh on outlook

October 1, 2025 | 14:27 IST