RBI’s repo cut to aid consumption, investment and funding cost, bankers say

Core Viewpoint - The Reserve Bank of India's 25 basis points repo rate cut is expected to support consumption, investment, and reduce corporate funding costs [1] Group 1: Economic Impact - The rate cut, along with a neutral stance and targeted liquidity interventions, aims to sustain economic momentum while ensuring price and financial stability [3][6] - The decision to cut rates while allowing for further easing helps cushion the economy against unexpected shocks or external headwinds, reinforcing a 'higher-for-longer' growth trajectory across investment, credit, and consumption [2] Group 2: Sectoral Benefits - The rate cut is anticipated to ease borrowing costs, stimulate demand in housing and real estate, support Micro, Small, and Medium Enterprises (MSMEs), and sustain growth in personal and auto loans [3][5] - Sectors heavily reliant on financing, such as real estate, autos, and Non-Banking Financial Companies (NBFCs), are expected to benefit from lower Equated Monthly Installments (EMIs) and improved borrowing conditions [6] Group 3: Credit Growth and Liquidity - Bank credit growth remains healthy at 11%, with overall credit from bank and non-bank sources growing by 13.1% [4] - The RBI's ₹1 lakh crore Open Market Operations (OMO) purchases and the introduction of a three-year USD/INR buy-sell swap are designed to support liquidity and monetary transmission, encouraging domestic investment and enhancing financial access [4][6]