RBI MPC Meeting Live Updates: Repo Rate Unchanged At 5.5% On Lower Inflation, Higher GDP Forecast

Keki Mistry, former VC and CEO of HDFC Bank, said the RBI decisions today has been "very good".

RBI has withdrawn the circular on blocking banks and NBFCs they own doing the same business. This is a big positive for HDFC Bank and HDB Financial Services.

"The segregation of role of NBFCs and banks that always weighed on people's minds seems to have been now withdrawn. The board of bank can now decide the allocation of assets between subsidiaries."

Repo Rate & Stance Unchanged

The RBI has kept the repo rate unchanged at 5.5% for the second consecutive time, in what was a unanimous decision from the MPC.

RBI has also retained 'neutral' stance, with most of the commentary from the governor Sanjay Malhotra alluding to lower inflation.

Outlook On Inflation

The Reserve Bank of India lowered its inflation project for FY26 at 2.6% vs 3.1% earlier, with Sanjay Malhotra stating, "There has been a singificant moderation in inflation."

The inflation project of Q2FY26 and Q3FY26 stands at 1.8% while Q4FY26 stands at 4%.

The RBI governor further stated that the recent GST cuts will lead to reduction in prices in the CPI basket.

GDP Growth Projection

Real GDP growth for FY26 has been revised upward to 6.8% from the earlier estimate of 6.5%, which indicates stronger-than-expected economic performance.

This comes on the back of a strong Q1FY26 GDP growth number, which stood at an impressive 7.8%.

RBI Keeping A Close Eye On The Rupee

At a time when rupee has continued to face downward pressure, RBI has vowed to keep a close eye on the local currency.

"The rupee has witnessed depreciation. We will be Keeping a close on the volatility of rupee," Malhotra said in his MPC address.

Measures To Improve Banking Ecosystem

RBI has proposed a series of measures to improve credit flow, ease costs and expanding lending flexibility.

A risk-based deposit insurance premium framework will be introduced, lowering costs for higher-rated banks.

In an attempt to enhance lending flexibility, the central bank has also proposed to remove he regulatory ceiling on lending against listed debt securities.

Limits for lending against shares raised from Rs 20 lakh to Rs 1 crore per person, and IPO financing caps enhanced from Rs 10 lakh to Rs 25 lakh per person.

The introduction of risk-based deposit insurance premiums to lower costs for higher-rated banks. The expansion of acquisition finance to broaden lending scope.

Regulatory changes in lending against securities:

• Removal of the ceiling on lending against listed debt securities

• Increase in limits for lending against shares from Rs 20 lakh to Rs 1 crore per person

• Enhancement of IPO financing limits from Rs 10 lakh to Rs 25 lakh per person

To make rupee more prominent in international trade, RBI Governor Sanjay Malhotra proposed three measures:

• Permit banks to lend in Indian rupees to non-residents in Nepal, Bhutan and Sri Lanka for cross-border trade transactions.

• To establish transparent reference rate for currencies of India's major trading partners to facilitate rupee-based transactions

• Permit wider use of special rupee vostro account (SRVA) balances by making them eligible for investments in corporate bonds and commercial papers.

The RBI Governor said the central bank will issue a discussion paper on licensing new urban co-operative banks.