The Reserve Bank of India’s decision to retain the repo rate at 5.25% and maintain a neutral policy stance will provide stability to borrowers, businesses and financial markets while preserving flexibility to respond to evolving global conditions, according to Karur Vysya Bank (KVB).
Stable policy environment supports growth
Commenting on the RBI’s latest monetary policy decision, Karur Vysya Bank Managing Director & CEO Ramesh Babu said the central bank’s move ensures a predictable operating environment at a time when geopolitical developments in West Asia continue to exert pressure on energy prices and global trade routes.
Despite these challenges, he noted that India’s economic growth and financial stability remain resilient.
“The RBI’s decision to keep the repo rate at 5.25% with a neutral stance ensures a predictable environment with room to adapt as global dynamics shift. Despite West Asia pressures on energy and trade routes, India’s financial stability and growth remain resilient. This timely pause helps contain inflation, keeps borrowing costs stable, and supports ease of doing business by protecting MSMEs and exporters from sudden credit shocks,” said Ramesh Babu.
Relief for homebuyers and real estate sector
According to said Ramesh Babu, the status quo on interest rates is particularly beneficial for home loan borrowers and the real estate sector.
He said existing homeowners will be protected from any immediate increase in equated monthly instalments (EMIs), while prospective buyers gain an opportunity to secure mortgage rates in a stable interest rate environment.
The KVB chief added that strong credit growth, healthy asset quality and robust capital adequacy levels have positioned banks to continue supporting retail lending and housing finance demand.
Measures to attract foreign capital welcomed
Ramesh Babu also welcomed the RBI’s initiatives aimed at strengthening capital inflows and supporting the rupee.
The measures include expanding the universe of long-term government securities under the Fully Accessible Route (FAR), removing Foreign Portfolio Investor (FPI) limits under the General Route, increasing stock market investment limits for non-resident Indians (NRIs), and introducing concessional foreign exchange swaps for public sector undertakings (PSUs) and authorised dealer (AD) banks.
Support for trade and savers
The restoration of the export realisation period to nine months will provide greater operational flexibility for exporters and support trade activities, he said.
At the same time, conservative savers are expected to continue benefiting from attractive returns on fixed-income deposits as interest rates remain unchanged.
“Overall, this is a balanced and reassuring move that protects growth while shielding us from global pressures,” Ramesh Babu added.