In a significant policy shift, the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 6.25%, marking the first such reduction since 2020. The decision, announced after the Monetary Policy Committee (MPC) meeting held between February 5 and 7, comes amid concerns over slowing economic growth. Previously, the repo rate had remained unchanged at 6.5% for 11 consecutive policy meetings.
With India’s GDP growth forecast at 6.7% for FY26—down from 8.2% in 2023-24—the RBI appears to prioritise economic expansion despite inflation remaining above the central bank’s 4% comfort level. Experts believe that the rate cut, coupled with the recent pro-growth Budget, which includes income tax reductions and incentives for infrastructure and MSMEs, will support consumption and long-term investments.
The six-member MPC, comprising three RBI members and three external experts, voted unanimously in favour of the rate cut. This was the first policy meeting chaired by RBI Governor Sanjay Malhotra, who took office in December 2024, succeeding Shaktikanta Das.
Apart from monetary policy changes, the RBI also introduced new cybersecurity measures. To strengthen the security of banking operations, Indian banks will be assigned the exclusive internet domain ‘bank.in,’ while non-banking financial entities will operate under ‘fin.in.’ Registrations for ‘bank.in’ will commence in April 2025, with ‘fin.in’ to follow.
