Views of leading voices from the banking sector on the MPC decisions
FinTech BizNews Service
Mumbai, June 6, 2025: The Monetary Policy Committee (MPC) held its 55th meeting from June 4 to 6, 2025 under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. After assessing the current and evolving macroeconomic situation, the MPC voted to reduce the policy repo rate by 50 basis points (bps) to 5.50 per cent with immediate effect.
Here are views of leading voices from the banking sector on the MPC decisions:
Ashok Chandra, MD&CEO, PNB:
The RBI’s calibrated reduction in the repo rate and a shift to a neutral stance reflects a forward-looking approach to nurturing growth while maintaining price and financial stability. The decision to reduce the CRR by 100 bps in a phased manner is particularly significant, as it will enhance systemic liquidity and provide additional lending capacity to the banking sector. With inflation trending lower and macro indicators showing resilience, this policy move will support credit offtake, boost investor sentiment, and further strengthen India’s growth momentum. At PNB, we see this as an opportunity to step up credit deployment, especially towards productive sectors and retail demand, while continuing to support MSMEs, retail, agri, and other priority segments. The Indian banking sector stands on strong fundamentals, and we remain aligned with the RBI’s vision of fostering a stable, inclusive, and growth-led financial ecosystem.
Salee S Nair, MD & CEO, Tamilnad Mercantile Bank:
”The RBI's recent policy action to lower the repo rate by 50 basis points to 5.5% is a strategic and growth-focused step. In a worldwide context characterized by sluggish trade, economic division, and persistent geopolitical conflicts, India's sustained internal strength especially in rural demand and urban recovery is promising. The early rate cut, along with an inflation forecast under 4%, demonstrates trust in India's macroeconomic foundations and aligns with the requirement to boost demand in crucial sectors.
Tamilnad Mercantile Bank, adorns rich history of supporting MSMEs and agricultural communities, views this policy as a chance to enhance credit availability, particularly for small businesses and rural enterprises that are essential to India’s economy. The reduced interest rate atmosphere offers essential relief to borrowers and will aid in capital expenditures and working capital requirements.
RBI has effectively supported banking system by extending support with a decision to reduce the Cash Reserve Ratio by 100 throughout the year, this will help banks in strengthening the liquidity within the system, continuing to able our customers with financial support. At TMB, we are heavily investing in digital on boarding, analytics, and mobile-first services to guarantee last-mile connectivity and quicker turnaround times, even in semi-urban and rural areas. These policy initiatives will enable banks such as ours to drive inclusive development and provide effective, customer-focused banking services.”
CS Setty, Chairman at SBI & Chairman at IBA:
“A 50-bps policy rate cut, a staggered 100 bps CRR cut and change of stance to neutral, RBI today's monetary policy communication was action packed - innovative, out of the box and an unanticipated surprise. The MPC has broadly addressed any concerns on slowdown in growth on account of global uncertainties and fully capitalized on the softening domestic inflation to deliver a frontloaded rate cut, staggered durable liquidity injection yet conserving the space for future action.
The policy is definitely positive for all sectors of the economy, particularly for banking and finance. In particular lower cost of borrowing will act as a counterbalance to any uncertainty.”
Binod Kumar MD & CEO of Indian Bank:
The RBI’s decision to cut the repo rate by 50 basis points to 5.50% while changing its stance to neutral will boost credit demand in sectors like Retail, Agriculture and MSME. It will also encourage private capex. CRR cut will provide liquidity at the hands of banks. RBI is taking very proactive steps keeping in view looming headwinds on credit growth. Lower rates will spur the retail demand especially for affordable housing. Good monsoon coupled with lower rates augurs well for agriculture sector. It will drive consumption and will boost rural demand. MSMEs, which are vital to India’s economy, will see improved cash flow and more room to grow. We will ensure to pass on rate transmission immediately to support entrepreneurs and keep the economy moving forward.
Shanti Ekambaram, Deputy Managing Director, Kotak Mahindra Bank:
"A significant boost to growth as the RBI surprised markets with a bold 50 bps cut in the repo rate and a 100-bps reduction in the CRR. With inflation remaining benign and domestic macroeconomic indicators stable, the Central Bank seized the opportunity to stimulate the economy. These decisive moves are expected to invigorate both urban and rural consumption, while also rekindling investor confidence and encouraging capacity expansion."
Shekhar Bhandari, President – SME, Kotak Mahindra Bank:
“RBI’s 50-bps repo cut and 100-bps CRR reduction have provided a vital liquidity boost to the Indian SME sector. These measures would lower borrowing costs and free up more funds in the banking system, enabling better credit access for small and medium enterprises. In the present economic climate, such steps are essential for supporting working capital needs, and encouraging growth and job creation. For SMEs, which form the backbone of India’s economy, these monetary policy actions can catalyze recovery, foster resilience, and stimulate investment, innovation, and competitiveness across the sector."
Manish Kothari, Group President and Head – Commercial Banking, Kotak Mahindra Bank:
A clear and decisive call from the RBI to propel economic growth — and all policy levers have been activated. The RBI has made a clear and decisive call to propel economic growth, deploying all key policy levers in a bold and timely manner. By front-loading a 50-basis point repo rate cut and infusing durable liquidity through a 100-basis point CRR reduction, the RBI has demonstrated its commitment to ensuring effective monetary transmission. With inflation softening, liquidity conditions comfortable, and financial stability intact across banks, NBFCs, and corporates, the macroeconomic environment is ripe for sustained growth. The shift to a neutral policy stance signal that while further rate cuts may be limited, the current policy remains sufficiently accommodative. As the Governor rightly emphasized, price stability alone is not enough — a supportive policy framework is essential in uncertain times to nurture growth and build economic momentum.”
Sagar Shah, Head – Domestic Markets, RBL Bank:
Very dovish policy frontloading the Repo cut and liquidity infusion. Reduced cost of capital will lay groundwork for capex with a lag of 2 quarters. CRR cut along with Repo cut should lead to transmission faster.
