Quote on RBI MPC Announcement by Vinit Bolinjkar - Head of Research - Ventura Securities
Below the Quote on RBI MPC Announcement by Vinit Bolinjkar - Head of Research - Ventura
The RBI’s MPC on October 1, 2025, kept the repo rate unchanged at 5.5% and maintained its monetary policy stance as 'neutral'. The RBI also raised its GDP growth forecast for FY26 to 6.8% and revised its inflation projection downward to 2.6%, citing the impact of GST reforms and easing food prices.
Additional announcements
Banking sector:
* RBI proposed a new Expected Credit Loss (ECL) framework to replace the incurred loss model, improving credit risk provisioning and comparability across banks. Draft guidelines under Basel III – Standardised Approach will enhance capital adequacy precision. Large private banks (HDFC Bank, ICICI Bank, Axis Bank) benefit from better credit risk modeling.
* A risk-based premium model for deposit insurance will reward stronger banks, moving away from a flat-rate regime. RBI will also relax rules on capital market exposure, allowing financing for acquisitions and broader lending against listed securities. Brokerage firms, NBFCs lending against securities, and corporates seeking funding will get the benefits.
Infrastructure funding:
* Guidelines on large borrower funding will be withdrawn, while risk weights for NBFC infrastructure loans will be recalibrated based on project risk profiles. This will improve infra financing and reduces cost of funds for operational PPP projects. Infrastructure-focused NBFCs (like PFC, REC, IIFCL, L&T Finance) will get the benefit.
Exporters:
* Indian exporters can now retain funds in IFSC accounts for 3 months (vs. 1 month earlier). RBI extended the forex outlay period for merchanting trade transactions to six months and simplified reconciliation for small-value exporters/importers (≤ Rs.10 lakh per bill). It will encourage IFSC usage, strengthens INR liquidity offshore, and boosts export competitiveness. Exporters, merchant traders, and IFSC-based entities will get the benefit.
* Revised frameworks for External Commercial Borrowings (ECBs) and foreign entity establishments aim to expand borrower base, rationalize limits, and enhance ease of doing business.
These measures collectively signal a shift toward risk-sensitive regulation, global integration of INR, greater operational autonomy, and enhanced customer trust, reinforcing India’s financial ecosystem for sustainable growth.
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