Parijat Agrawal, Head of Fixed Income at Union Asset Management Company Private Limited-
"The Monetary Policy Committee (MPC) maintained status quo on rates and stance in line with the market expectation. Real GDP growth for this year has been revised upward to 6.8% from the earlier estimate of 6.5%. The inflation forecast for fiscal 2026 has been revised down to 2.6% from the previous 3.1%. This could augur well for the bonds market. In our assessment, given the favourable growth inflation dynamics, the rate environment is expected to remain benign with possibility of further monetary support. There could be some volatility due to prevailing global uncertainties and tariff related developments. However, real yields are very attractive at this juncture. Hence, investors are advised to remain invested in light of the prevailing benign environment."
Monetary Policy Committee (MPC) of the Reserve Bank has decided to maintain the status quo on the policy repo rate at 5.5% given the backdrop of moderate headline inflation and high GDP growth in Q1 FY 26 at 7.8% amidst tariff related uncertainties, said Mr. Hemant Jain.
With GDP growth holding steady and inflation risks expected to remain contained—particularly as the full impact of recent GST rate reductions is yet to materialize—the Committee has opted to retain a neutral policy stance. Further, Good monsoon, direct tax cuts, and monetary push, will led to an upward revision of India's Real GDP growth for FY 2025-26, he added.
Healthy progress of the southwest monsoon, higher kharif sowing, adequate reservoir levels and comfortable buffer stock of foodgrains, and prudent government measures to manage agriculture supply chains, outlook for headline CPI Inflation for FY2025-26 has been projected at 2.6%, said Mr. Hemant Jain.
Additionally, announcement of a package of twenty two additional measures included under ease of doing business, resilience and competitiveness of the banking sector, credit flow, simplify foreign exchange management, consumer satisfaction, and internationalisation of Indian Rupee are steps in right direction at the right time, said Mr. Hemant Jain.
To strengthen the resilience and competitiveness of the banking sector, a draft of the Standardised Approach for Credit Risk has been proposed with lower risk weights on certain segments, which are expected to reduce the overall capital requirements, particularly for MSMEs and residential real estate (including home loans), said Mr. Hemant Jain.
For improving the flow of credit, the MPC proposed to remove the regulatory ceiling on lending against listed debt securities and enhance limits for lending by banks against shares from Rs. 20 lakh to Rs. 1 crore and for IPO financing from Rs. 10 lakh to Rs. 25 lakh per person, said Mr. Hemant Jain.
Additionally, to promote Ease of Doing Business, an extension of the time period for repatriation from foreign currency accounts of Indian exporters in IFSC, from one month to three months, an increase the period for forex outlay for Merchanting Trade transactions, from four months to six months; and simplification of the process of reconciliation of outstanding entries related to exports and imports in the respective reporting portals (EDPMS/IDPMS), has been proposed, said Mr. Hemant Jain.
To enhance consumer satisfaction the services offered to Basic Savings Bank Deposit account holders without levy of minimum balance charges is proposed to be expanded to, inter alia, include digital banking (mobile/internet banking) services, said Mr. Hemant Jain.
Further, for Internationalising Indian Rupee, it has been proposed to establish transparent reference rates for currencies of India's major trading partners to facilitate INR based transactions, said Mr. Hemant Jain.
India's external sector remains resilient with Net FDI reaching 38 month high in July 2025 driven by increased gross foreign direct investment and a moderation in repatriation and outward foreign direct investment, USD 700.2 billion FOREX reserves (as on 26th September 2025), despite US Tariff announcements and net FPI outflows, said Mr Jain.
The RBI's commitment to remain *"proactive, objective and consistent"* in its communication while backing it up with credible actions provides confidence in the policy framework's adaptability to evolving conditions, says CEO and Secretary General, PHDCCI, Dr. Ranjeet Mehta.
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