RBI Holds Repo Rate at 5.25 percent, Strengthens Financial Ecosystem with Flexible Policy, Liquidity Support and MSME-Focused Reforms

 By Ms. Shilpa Bhatter, Chief Financial Officer, UGRO Capital.

“The Reserve Bank of India’s decision to keep the repo rate unchanged at 5.25%, while reiterating a neutral policy stance, reflects a calibrated and forward-looking approach amid evolving global and domestic uncertainties. This stance preserves policy flexibility while anchoring macroeconomic stability.

With CPI inflation projected at 4.6% for FY27 and core inflation expected to remain around 4.4%, the current rate setting ensures that real interest rates stay modestly positive. This supports price stability without impeding growth, striking an effective balance between inflation management and economic momentum. The prevailing system liquidity surplus of approximately ₹2.3 lakh crore under LAF enhances the efficiency of ALM for financial institutions, while sharpening the focus on disciplined loan pricing—particularly in MSMEs, where yields remain highly sensitive.

This is complemented by structural enablers such as the inclusion of NBFCs in the term money market, which broadens access to diversified short-term funding and reduces reliance on expensive funding sources. Additionally, the relaxation in TReDS onboarding norms is a timely measure that will accelerate receivables financing for MSMEs, a segment that contributes nearly 30% to GDP.

Overall, these policy measures collectively enhance funding flexibility, credit transmission, and balance sheet growth for NBFCs, while strengthening credit access for MSMEs—reinforcing the resilience of the broader financial ecosystem in an uncertain global environment.”