Overview

• RBI cut its key repo rate by 50 basis points and trimmed banks’ cash reserve ratio by 100 basis points while shifting its policy stance from accommodative to neutral.
• The CRR reduction is set to release about ₹2.5 trillion of liquidity into the banking system, adding to the ₹9.5 trillion of durable liquidity injected since January.
• The measures are designed to bolster consumption and SME investment and to steer India’s growth toward the central bank’s aspirational 7–8% target.
• Analysts caution that the efficacy of the easing will hinge on banks’ willingness to lend to SMEs and households and on muted corporate appetite for new borrowing.
• Market forecasts suggest net interest margins could widen by 3–12 basis points and system loan growth may accelerate to around 12% by fiscal 2026.