The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, bringing it down from 6.25% to 6%. For the second time RBI has cut rates under Governor Sanjay Malhotra. The first rate was reduced in February. This decision is taken after a 3-day meeting held between April 7 and April 9, 2025 in a policy review meeting.
A rate cut means loans (like home, auto and corporate loans) will be cheaper. This will definitely benefit the homebuyers and the developers. By reducing rates, RBI is responding to global economic challenges and supporting economic growth. At present, the government is not only focused on economic growth but also focused on managing inflation.
When home loans become cheaper, EMI is expected to be reduced. Developers are also expected to lower borrowing cost which will encourage them to launch more real-estate projects.
Highlighted Points of the updates from the RBI Monetary Policy Meeting:
– RBI governor Sanjay Malhotra said he is more concerned about the impacts of tariffs on economic growth rather than inflation. After trump imposed the tariffs, RBI reduced its growth forecast for FY 2025-2026 to 4% (from 4.2%) due to strong agricultural production and falling crude oil prices.
– RBI approved the National Payments Corporation of India (NPCI) to raise the transaction limit for Unified Payments Interface (UPI) payments, especially to P2M transactions. This change is done to meet the requirements of the users who need to pay higher amounts for day-to-day transactions or larger purchase.
– Person to Person(P2P) transaction limit is Rs 1 lakh and the Person to merchant (P2M) transaction limit is also Rs 1 lakh but there are some exceptions where higher limits are allowed, like Rs 2 lakh or Rs 5 lakh for certain types of payments (e.g., big-ticket transactions for specific use cases like paying for airline tickets).
– Malhotra said that the tariff imposed by Donald Trump, is affecting markets worldwide, including the Indian stock market. Reduced trade between India and other countries can hurt Indian exports and economic growth.
– India’s GDP for the year 2025-2026 is expected to grow by 6.5%. RBI said that the purchasing power of people in villages and smaller towns is increasing. Urban consumption is recovering and government is investing in big projects which will boost economic activity.
In simple terms by reducing rates, RBI wants to strengthen the economy and support the economic growth while maintaining price stability. Loans for individuals and businesses become cheaper and will boost consumer spending and investment. Overall outlook is positive but global issue might cause some bumps along the way.
