RBI Governor Urges Banks to Pass on Rate Cuts to Customers

The Reserve Bank of India has called on lenders to accelerate monetary transmission, with Governor Sanjay Malhotra asking public and private sector banks to pass on recent policy rate reductions to customers.  

The discussion took place during a meeting in Mumbai with the managing directors and CEOs of public sector banks and select private sector lenders, amid efforts to support long-term economic momentum. 

RBI Pushes for Rate Transmission 

Since February 2025, the central bank has reduced the repo rate by 125 basis points, bringing it down to 5.25% to stimulate growth. India recorded 8% GDP expansion in the 1st half of the fiscal year.  

Malhotra reaffirmed that these policy cuts must reach consumers, while noting improvements in the banking sector’s performance through 2025. He also cautioned institutions against complacency, emphasising consistent vigilance in an evolving financial environment. 

The Governor highlighted that rate reductions combined with technological progress should lower intermediation costs and broaden financial inclusion. He urged banks to strengthen customer service by reducing grievances and streamlining internal processes. 

Strengthening Cyber Safety and Customer Protection 

Malhotra raised concerns over rising digital financial fraud and called on banks to adopt stronger intelligence-driven security systems.  

He acknowledged progress on re-KYC compliance and unclaimed deposit initiatives and encouraged wider outreach and awareness programmes. The RBI reiterated its collaborative approach, supported by recent steps to simplify operational frameworks. 

Deputy Governors T Rabi Sankar, Swaminathan J, Poonam Gupta, and S C Murmu attended the meeting, along with Executive Directors overseeing supervision, enforcement, regulation, and consumer protection. The interaction follows an earlier session on 27 January 2025. 

Read More: RBI Announces 6.52% Interest on FRB 2031 for December 2025–June 2026! 

Conclusion 

The meeting underscores the RBI’s focus on faster rate transmission, stronger cyber safeguards and improved customer-centric operations across India’s banking sector. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.