RBI Cuts Repo Rate by 25 bps, Focuses on Growth: 5 Key Takeaways from April MPC Meeting

The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points (bps) in its April Monetary Policy Committee (MPC) meeting held on April 7, 8, and 9. The decision was taken to support economic growth while keeping inflation in check. The new repo rate is set at 6%, effective immediately. 

Here are the 5 key takeaways from the RBI’s April policy meeting:

Interest Rates Cut, Policy Stance Turns Accommodative

RBI Governor Sanjay Malhotra announced a 25 bps cut in the repo rate, bringing it down to 6%. Other key rates were also adjusted: 

• Standing Deposit Facility (SDF) rate: 5.75% 

• Marginal Standing Facility (MSF) rate & Bank Rate: 6.25% 

Additionally, the RBI shifted its policy stance from “neutral” to “accommodative”, meaning it may take further steps to support economic growth. 

Read More CRISIL, Ashiana Housing, and Others in Focus for Dividend, Stock Split, and Rights Issue. 

 Inflation Expected to Stay Low in FY26

The RBI has revised its inflation forecast for FY26 downward, expecting it to remain around 4%, compared to the earlier estimate of 4.2%. The new quarterly projections are: 

• Q1: 3.6% (previously 4.5%) 

• Q2: 3.9% (previously 4%) 

• Q3: 3.8% (unchanged) 

• Q4: 4.2% (previously 4.4%) 

The central bank believes inflation will stay at comfortable levels and that risks are evenly balanced. 

 Growth Forecast Lowered for FY26

Due to uncertainties in global trade and policies, the RBI lowered its GDP growth projection for FY26 from 6.7% to 6.5%. The quarterly growth estimates have also been revised: 

• Q1: 6.5% (previously 6.7%) 

• Q2: 6.7% (previously 7%) 

• Q3: 6.6% (previously 6.5%) 

• Q4: 6.3% (previously 6.5%) 

Despite the revision, the RBI remains optimistic that growth will remain strong. 

 Current Account Deficit (CAD) Under Control

The RBI Governor reassured that India’s net services exports and remittance inflows will continue to help balance the trade deficit. He noted that India’s services exports remained strong in early 2025, led by software, business, and transportation services. 

As a result, the current account deficit (CAD) for FY25 and FY26 is expected to stay within sustainable levels. 

 Additional Announcements by RBI

The RBI Governor introduced six key regulatory measures across banking, fintech, and payments: 

• Securitisation of Stressed Assets: Banks will be able to sell stressed loans through a market-based mechanism, in addition to the existing Asset Reconstruction Company (ARC) route. 
• Expanded Co-Lending Model: The RBI will allow all regulated lenders to co-lend across different types of loans. 
• New Gold Loan Regulations: The central bank will introduce stricter rules for gold loans, covering lending practices and customer protection. 
• Revised Rules for Non-Fund-Based Facilities: RBI will harmonise regulations for letter of credit, bank guarantees, and credit enhancement facilities across lenders. 
• UPI Transaction Limits: The NPCI (National Payments Corporation of India) will work with banks to set transaction limits for UPI person-to-merchant payments. 
• Regulatory Sandbox to be Open for All: The RBI will make its Regulatory Sandbox “theme-neutral” and open for ongoing applications, allowing fintech companies to test innovations more freely. 

Conclusion 

The RBI’s April policy meeting focused on balancing growth and inflation while keeping financial risks in check. The repo rate cut, inflation control measures, and regulatory changes are expected to support economic stability and enhance credit access for businesses and consumers. 

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