The Reserve Bank of India’s decision to keep the repo rate unchanged at 5.25% and maintain a neutral policy stance reflects a balanced and prudent approach aimed at preserving macroeconomic stability amid an uncertain global environment, according to Indian Overseas Bank (IOB).
Growth momentum remains resilient
Commenting on the RBI’s latest monetary policy decision, Indian Overseas Bank Managing Director & CEO Ajay Kumar Srivastava said the central bank has struck the right balance between supporting economic growth and containing potential risks arising from external developments.
He noted that while the Indian economy continues to demonstrate resilience, with growth projected at 6.6% for FY27, a cautious policy approach remains appropriate given ongoing geopolitical tensions in West Asia and elevated energy prices.
Stable rates offer relief to borrowers
According to Srivastava, the decision to keep policy rates unchanged reinforces the sustainability of the economic recovery while providing predictability in borrowing costs.
“The RBI’s decision to keep the repo rate unchanged at 5.25% with a neutral stance reflects a balanced and prudent approach, prioritising macroeconomic stability amid a challenging global backdrop. Even as the economy demonstrates resilience, with growth projected at 6.6% for FY27, a cautious stance is warranted given geopolitical tensions in West Asia and elevated energy prices. By keeping rates steady, the RBI reinforces the sustainability of the ongoing recovery while ensuring predictability in borrowing costs, a welcome relief for both households and businesses,” said Srivastava.
Measures to boost foreign capital welcomed
The IOB chief also welcomed the RBI’s initiatives aimed at attracting foreign capital and strengthening the domestic government securities market.
These include the expansion of the Fully Accessible Route (FAR) to longer-tenor government securities and support for hedging costs on fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.
“We also welcome the RBI’s measures to attract foreign capital and deepen the government securities market, including the expansion of the Fully Accessible Route to longer-tenor G-Secs and the hedging-cost support for fresh FCNR(B) deposits, a stable foreign-currency funding source. Together with steps to strengthen the balance of payments, these initiatives will deepen financial markets, enhance systemic efficiency, and reinforce overall financial stability,” Srivastava added.