By Mohammad Haris,News18

Copyright news18

RBI Repo Rate News: The Reserve Bank of India’s (RBI) monetary policy committee (MPC) has kept the key repo rate unchanged at 5.5% in its October bi-monthly monetary policy review, Governor Sanjay Malhotra announced on Wednesday. The decision has been taken unanimously, while the RBI MPC’s policy stance remains ‘neutral’.
Announcing the fourth bi-monthly policy review of FY26, Malhotra said, “After a detailed assessment of the evolving macroeconomic conditions and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged at 5.50 per cent.”
RBI MPC Meeting October 2025: Latest Policy Rates
The repo rate stands at 5.5%, while the fixed reverse repo rate remains at 3.35%. The RBI also maintained the standing deposit facility (SDF) at 5.25 per cent, as well as marginal standing facility (MSF) and bank rates at 5.75 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.
Cash reserve ratio (CRR) and statutory liquidity ratio (SLR) also remains unchanged at 3.75% and 18%, respectively.
The repo rate is the interest rate at which the RBI lends money to commercial banks, while the cash reserve ratio (CRR) is the percentage of a bank’s total deposits that must be kept with the RBI as reserves in cash form.
FY26 GDP Growth Forecast Raised To 6.8%
The RBI on Wednesday revised upwards its GDP forecast for FY26 to 6.8%, from 6.5% earlier.
“Economic growth outlook remains resilient helped by favourable monsoon, lower inflation and monetary easing… Domestic economic activities continue to sustain momentum in 2nd quarter of this fiscal,” said the RBI governor while announcing the latest monetary policy.
Real GDP growth for 2025-26 is now projected at 6.8 per cent, with Q2 at 7.0 per cent, Q3 at 6.4 per cent, and Q4 at 6.2 per cent. Real GDP growth for Q1:2026-27 is projected at 6.4 per cent, he added.
FY26 Inflation Lowered To 2.6%
The RBI has lowered its inflation projection for FY26 to 2.6%, against the earlier estimate of 3.1%.
“Inflation conditions remained benign during 2025-26 so far with actual outcomes turning out to be significantly lower than projections. Low inflation is primarily attributed to a sharp fall in food inflation, aided by improved supply prospects and measures by the government to effectively manage the supply chain,” Malhotra said.
CPI inflation for 2025-26 is now projected at 2.6 per cent with Q2 at 1.8 per cent; Q3 at 1.8 per cent; and Q4 at 4.0 per cent. CPI inflation for Q1:2026-27 is projected at 4.5 per cent, he added.
‘Reforms To Offset Tariff Impact’
The RBI governor said tariff-related developments are likely to decelerate growth in the second half of this fiscal, but GST and other policy reforms announced by Prime Minister Narendra Modi recently will offset impact of external factors on economic growth to some extent.
“The implementation of several growth-inducing structural reforms, including streamlining of GST are expected to offset some of the adverse effects of the external headwinds,” the RBI governor said.
RBI’s Additional Measures Announced
Banking Sector Resilience

ECL provisioning framework for all Scheduled Commercial Banks & AIFIs from Apr 2027, glide path till Mar 2031.
Basel III capital norms effective Apr 2027; draft on Standardised Credit Risk Approach soon.
Risk-based deposit insurance premium to replace flat rate.
Overlap restrictions between banks and group entities removed.

Improving Credit Flow

Banks allowed to finance corporate acquisitions.
Lending cap against shares raised to Rs 1 crore (from Rs 20 lakh); IPO financing limit to Rs 25 lakh (from Rs 10 lakh).
2016 framework discouraging lending to large borrowers withdrawn.
Lower risk weights for NBFC lending to quality infra projects.
Discussion paper to reopen licensing for Urban Co-op Banks.

Ease of Doing Business (EoDB)

A total 9,000 RBI circulars have been consolidated into 11 categories; drafts soon.
Greater flexibility for current/CC/OD accounts; collection account restrictions eased.
Exporters: repatriation window in IFSC extended to 3 months; merchanting trade forex period to 6 months; reconciliation simplified.

Forex Management

ECB rules (borrowers, lenders, limits, reporting) to be rationalised.
FEMA norms eased for non-residents setting up business in India.

Consumer-Centric Steps

Basic savings accounts to include mobile/internet banking.
Stronger internal ombudsman system.
RBI Ombudsman Scheme widened to cover rural co-op banks.

Internationalisation of Indian Rupee
Indian banks can lend in the Indian rupee to non-residents in Bhutan, Nepal, Sri Lanka for trade.
Transparent reference rates for major currencies.
SRVA balances allowed for investment in corporate bonds and CPs.
The RBI has already reduced the repo rate three times by 100 bps in the current rate cut cycle — 25 bps cut each in February and April, and 50 bps in June. However, in the previous policy, August 2025, the key policy rate was kept unchanged at 5.5%, with the ‘neutral’ stance.