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RBI Monetary Policy Committee Meeting April 2026: The RBI also cuts the SDF to 5.75 per cent, and MSF and Bank Rates to 6.25 per cent.
RBI announces its April 2025 monetary policy.
RBI Monetary Policy Committee Meeting April 2025: The RBI’s Monetary Policy Committee (MPC) has decided to cut the key repo rate by 25 basis points (bps) to 6 per cent unanimously, RBI Governor Sanjay Malhotra announced on Wednesday. He also said the MPC has also changed its policy stance from ‘neutral’ to ‘accommodative’.
Announcing the first bi-monthly monetary policy of FY26, the RBI governor said, “FY26 has started on an anxious note. Some trade frictions are coming true, unsettling the globe… We remain vigilant from uncertainties on the global front.”
The RBI MPC noted that inflation is below the target. The ‘accommodative’ stance is in line with the current economic situation, Malhotra said.
RBI MPC Meeting April 2025: Repo, Reverse Repo, CRR, SDF, MSF, Bank Rate
The RBI on Wednesday reduced the key repo rate by 25 basis points to 6 per cent. It also cut the SDF to 5.75 per cent, and MSF and Bank Rates to 6.25 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.
The cash reserve ratio (CRR) stands same at 4 per cent and the statutory liquidity ratio (SLR) at 18 per cent.
FY26 GDP Growth Forecast Lowered To 6.5%
The RBI on Wednesday revised downwards its FY26 GDP forecast by 20 bps to 6.5 per cent, from the 6.7 per cent projected earlier.
The cut in GDP growth forecast comes at a time when the world economy is facing a global tariff war and a likelihood of the recession in the US.
“Real GDP growth for 2025-26 is now projected at 6.5 per cent, with Q1 at 6.5 per cent; Q2 at 6.7 per cent; Q3 at 6.6 per cent; and Q4 at 6.3 per cent,” Malhotra said.
He also added that the global economic outlook is fast changing. The recent trade tariff-related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation.
However, on the demand side, he said bright prospects of the agriculture sector bode well for rural demand which continues to be healthy, while urban consumption is gradually picking up with an uptick in discretionary spending.7 Investment activity has gained traction.
India’s GDP grew by 6.2 per cent in Q3 FY25, higher than the revised estimate of 5.6 per cent recorded for the previous Q2 FY25.
CPI Inflation Cut To 4% For FY26
The RBI on Wednesday also cut the CPI inflation to 4 per cent for FY26, from the 4.2 per cent forecast earlier.
The RBI governor said, “Headline inflation moderated during January-February 2025 following a sharp correction in food inflation. The outlook for food inflation has turned decisively positive. The uncertainties regarding rabi crops have abated considerably and the second advance estimates point to a record wheat production and higher production of key pulses over that last year. Along with robust kharif arrivals, this is expected to set the stage for a durable softening of food inflation.”
Assuming a normal monsoon, CPI inflation for the financial year 2025-26 is projected at 4.0 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per cent; Q3 at 3.8 per cent; and Q4 at 4.4 per cent. The risks are evenly balanced.
Skymet on Wednesday predicted an above normal (103 LPA) monsoon this year in India.
India’s CPI inflation has come under the RBI’s target limit of 4 per cent (+/- 2 per cent). In February, India’s retail inflation eased a seven-month low of 3.61 per cent, mainly on account of lower rate of price rise in vegetables and protein-rich items.
Additional Measures
1. Market-Based Mechanism for Securitisation of Stressed Assets
In a significant move to expand the options for dealing with stressed assets, RBI Governor Sanjay Malhotra announced the introduction of a new market-driven mechanism.
“It is proposed to enable securitisation of stressed assets through market-based mechanism. This is in addition to the existing ARC route under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002,” Malhotra said.
2. Co-Lending Guidelines Extended Beyond Banks and NBFCs
The co-lending model will now see a broader application, going beyond just priority sector loans and limited participants.
“The extant guidelines on co-lending are presently applicable only to arrangements between banks and NBFCs. Moreover, they are restricted to priority sector loans. To exploit the huge potential of such lending arrangements, it is proposed to extend them to all regulated entities and to all loans – priority sector or otherwise,” he added.
3. Unified Regulations for Gold Loans
To ensure uniformity across financial institutions, the RBI plans to introduce comprehensive regulations governing gold-backed loans.
“Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities for both consumption and income-generation purposes. In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential risk-bearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct related aspects for such loans,” he added.
4. Overhaul of Non-Fund-Based Facility Rules and PCE Norms
The RBI aims to streamline and update the norms around non-fund-based credit and partial credit enhancements, crucial for infrastructure funding.
“To harmonise the regulations governing non-fund-based facilities across regulated entities, we propose to issue comprehensive guidelines. Instructions related to partial credit enhancement (PCE) by regulated entities are also proposed to be revised. This is expected to broaden the funding sources for infrastructure financing,” the RBI governor said.
The draft of these four guidelines and regulations are being published today for public consultation, he added.
5. NPCI Empowered to Set UPI Merchant Transaction Limits
The National Payments Corporation of India (NPCI) will now get more autonomy to decide transaction limits for UPI merchant payments, said Sanjay Malhotra.
6. Regulatory Sandbox Goes Theme-Neutral and On-Tap
In a major boost for fintech innovation, the regulatory sandbox will now be accessible year-round without being limited to specific themes and ‘on-tap’.