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Tag: RBI Governor

  • Following the RBI Repo Cut, Banks Begin to Lower Loan Rates

    After the RBI lowered the repo rate by 25 basis points to 6% on April 9, a number of banks adjusted their external benchmark lending rates. With effect from April 11, Indian Bank said that it will lower its repo-linked benchmark lending rate (RBLR) from 9.05% to 8.7%. With effect from April 10, PNB reduced its repo-linked lending rate (RLLR) from 9.1% to 8.85%. With effect from April 9, Bank of India has changed its RBLR from 9.1% to 8.85%. As of April 10th, UCO Bank has lowered its lending rate to 8.8%.

    The RBI declared that it would keep excess liquidity in the system after the monetary policy committee unanimously decided to lower interest rates. Further, the committee also changed the policy stance to one that is more accommodating. All floating-rate loans must be linked to an external benchmark by banks, per RBI regulations. It is anticipated that the repo rate cut will lower lending rates, but because the cost of capital has not decreased as quickly, banks’ net interest margins may be compressed.

    Move Will Benefit Both Existing and New Borrowers

    Both new and current borrowers of these banks will profit from this decision. Other banks are expected to make similar statements soon. Following the RBI’s reduction in the short-term lending rate (repo rate), these public sector banks verified the modification in loan rates in separate notifications to the stock markets.

    The RBI Governor also declared that the monetary policy stance would shift from neutral to accommodating. Because of the shift in policy, house loan borrowers may expect further reductions in repo rates and, as a result, reduced home loan interest rates. The RBI had not lowered the repo rate in five years, the previous time being in the February policy.

    RBI May Further Cut the Rate

    According to the State Bank of India’s Ecowrap report, a significant drop in the cost of food and drink caused India’s CPI inflation to drop to a 7-month low of 3.6% in February 2025. Additionally, according to the research, core inflation may range between 4.2% and 4.4%, while inflation for FY26 is anticipated to be between 4.0% and 4.2%. In April and August of 2025, the central bank may lower interest rates one after the other, with a minimum 75 basis point cumulative rate reduction anticipated. The United States recently levied a 26% tariff on imports from India. According to media reports, this will cut India’s GDP growth for FY 2025–2026 by 20–40 basis points, possibly bringing it down from the RBI’s initial prediction of 6.7% to about 6.1%.

    In order to combat economic pressure, this might encourage the RBI to further reduce interest rates. According to DK Srivastava, Chief Policy Advisor at EY India, the RBI’s decision to adopt an accommodative attitude and reduce the policy rate by 25 basis points for the second consecutive time shows that it is prepared to protect India’s chances for GDP development. It is anticipated that the RBI would continue the downward rate cycle by lowering the repo rate by 25 basis points each over the course of the following three rounds, bringing it down to 5.25%.

  • As Trump Tariffs Take Effect, RBI Lower Repo Rate to 6%

    The repo rate was lowered by 25 basis points to 6% by the Reserve Bank of India. As a result, banks will have cheaper borrowing costs and be able to offer loans to individual consumers at reduced interest rates, which will lower loan instalment payments. The Monetary Policy Committee (MPC) unanimously decided to lower the repo rate, RBI Governor Sanjay Malhotra announced on 9 April. This is the second time the central bank has lowered the repo rate this year. The interest rate that the RBI charges commercial banks on the funds it lends them is called the repo rate or purchase agreement rate. Therefore, banks frequently pass the savings on to customers when it is decreased.

    The MPC reduced the repo rate from 6.5% to 6.25% during its most recent meeting in February 2025, which was the first rate drop since 2020. In an effort to increase credit flow and improve banking sector liquidity, the central bank recently lowered the Cash Reserve Ratio (CRR) by 50 basis points to 4%. In February, the MPC stuck to its neutral posture, which it had initially taken in October 2024. Because of its adaptability, the RBI can react to changing market conditions without being constrained by predetermined policy trajectories.

    Commenting on the development, Rohit Garg, CEO and Co-Founder, Olyv stated, “The RBI’s 25 bps repo rate cut is a clear signal to support growth while maintaining vigilance on inflation. For India’s credit-starved MSMEs and middle-class borrowers, even a marginal reduction in borrowing costs can unlock meaningful financial relief. However, the real test lies in the speed and efficiency with which the financial system transmits this benefit to end consumers. Monetary policy can be a powerful enabler, but its real impact will depend on coordinated execution, structural reforms, and the agility of our financial institutions. The MPC’s stance reflects cautious optimism—acknowledging easing inflation trends while staying alert to global uncertainties such as volatile commodity prices, geopolitical tensions, and shifts in global monetary policy.”

    Trump’s Reciprocal Tariff Hampers the Global Economic Growth

    According to the RBI Governor, the global economy is experiencing anxiety as the fiscal year gets underway. He further stated that the central bank is monitoring inflation risks that arise from these uncertainties. This occurs just a few days after the US administration of Donald Trump placed reciprocal tariffs on Indian products. The governor of RBI stated that the impact of trade frictions on global development will hinder domestic growth. Net exports may be impacted by higher tariffs. India is aggressively negotiating trade with the US government. He claimed that it is now hard to predict how global changes will affect growth. However, he claimed that the central bank had no worries about controlling domestic development.

    RBI Governor Elaborating on Overall Pulse of Indian Market

    According to the Governor manufacturing activity is reviving, and the agricultural sector’s prospects are still promising. The services industry is still resilient, he continued. With an increase in discretionary spending, urban consumption is increasing. He reported that bank and business balance sheets are “healthy” in the banking sector. The RBI Governor stated that the Monetary Policy Committee had taken note of the rapid decline in food prices and the fact that inflation is currently below goal. Real GDP growth is now expected to be 6.5%, a 20 basis point reduction from the GDP growth estimate for this fiscal year.

  • Build Reliable Mechanisms to Reduce Online Fraud: RBI Governor to Financial Institutions

    Sanjay Malhotra, governor of the Reserve Bank of India (RBI), has counselled banks to set up strong and proactive procedures to stop the nation’s growing number of digital frauds. In order to reduce the risks associated with information technology (IT) and cybersecurity, the governor of the RBI also asked the financial institutions to strengthen oversight over their third-party service providers. Additionally, he urged the banks to enhance digital literacy and keep making technological investments. The governor made the remarks on January 27 in Mumbai while meeting with the chief executives of banks in the public and private sectors. In addition to Malhotra, the conference was attended by deputy governors Rajeshwar Rao, T. Rabi Sankar, and Swaminathan Janakiraman. In a statement, the central bank said that these exchanges are a part of the Reserve Bank’s ongoing communication with the top executives of the companies it oversees. The comments are made at a time when private companies and Indian government institutions are being bombarded by cyberattacks.

    Sharing his thoughts on the comments, Appalla Saikiran, Founder and CEO, SCOPE, stated, “The financial sector is undergoing rapid digital transformation, increasing opportunities but also increasing the vulnerabilities encountered by modern financial institutions. It has become imperative for financial institutions to herald mechanisms built through the front gate in the fight against online fraud. As cyber threats continue to grow both in volume and complexity, the industry must step up from reactive measures to proactive ones that have security and consumer trust at their centre.”

    “State-of-the-art solutions like machine learning (ML) and artificial intelligence (AI) thus have the potential to revolutionise the current fraud-prevention technologies. This is repetition but important as they give financial institutions an incredible ability to mine vast amounts of data in real time to spot abnormalities and act instantly on potential threats. Appropriate identification procedures and encryption are the most decent means to protect sensitive data from illicit access amongst the privacy-breaking actions,” he added further.

    Cyber Criminals Looted Around INR 177 Cr in FY24

    India lost INR 177.05 Cr to cyber scams in FY24, more than twice as much as INR 69.68 Cr in FY23, according to various published reports. The number of online scams in the nation increased by 334% year over year (YoY) to 29,082 in FY24, according to an RBI data. Nearly 300 tiny local banks’ payment systems were momentarily shut down by a ransomware attack on C-Edge Technologies just last year. C-Edge Technologies supplies banking technology systems to small banks nationwide. The Supreme Court’s official YouTube channel was hacked in September 2024 to show videos endorsing a cryptocurrency created by Ripple Labs, a US-based corporation. The Centre has increased its efforts to stop these cases in the interim.

    Government Enhancing the Security Channels

    In order to combat the growing number of cybercrimes in the nation, Home Minister Amit Shah stated last year that the government was seeking to establish a central registry of suspects. The “Citizen Financial Cyber Fraud Reporting and Management System,” which the government also established, has prevented scammers from stealing more than INR 2,400 Cr. To increase awareness of cybersecurity in India, fintech unicorn Razorpay partnered with the Indian Cyber Crime Coordination Centre (I4C) and the Ministry of Home Affairs (MHA) in December.

    DOT’s Request to Telcos

    The telecom department ordered operators to play a caller song about cybercrime awareness eight to ten times a day for three months last December. The Indian Cybercrime Coordination Centre (I4C), a cybercrime wing under the Home Ministry, has supplied the caller tunes, as per the order copy that was delivered to the telecom carriers.

    According to the order, caller tune audios will be played through pre-call announcements and ringback tones, which will be supplied to TSPs by I4C nodal officers in order to raise public awareness of cybercrime through the caller tune campaign. A subscriber may hear caller tunes eight to ten times every day.

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    StartupTalkyNitin Konde

  • Quick Access to Loans for Borrowers in Rural Areas: RBI to Unveil Unified Lending Interface

    On 26 August 2024, Shaktikanta Das, governor of the Reserve Bank of India (RBI), stated that the bank is considering a nationwide launch of a technological platform dubbed the Unified Lending Interface (ULI) to expedite the distribution of loans, particularly to smaller borrowers and those residing in rural areas.

    At a worldwide conference in Bengaluru on “Digital Public Infrastructure and Emerging Technologies,” Das predicted that ULI will revolutionise retail financing in the same way that UPI did.

    “We expect ULI to transform the lending landscape,” the governor stated, comparing it to how the Unified Payments Interface changed the payments sector.

    For the purpose of facilitating frictionless financing, the central bank created the Public Tech Platform one year ago today. The original intent was to simplify the process of obtaining a loan or credit by giving lenders digital information in a matter of minutes.

    “VoloFin welcomes the Reserve Bank of India’s initiative to introduce a unified lending interface, a pivotal step towards enhancing financial inclusion across rural India. This platform will empower borrowers in remote areas by providing quick and seamless access to credit, bridging the gap between financial institutions and the underserved segments of our society. The availability of instant loans will not only boost economic activity but also enable entrepreneurs in these regions to scale their businesses, create jobs, and contribute to the overall development of their communities. As a company dedicated to simplifying finance and extending support to MSMEs, we believe that this move will revolutionize the way rural India interacts with financial services,” said Roshan Shah, Co-Founder & CEO, VoloFin.

    Echoing similar sentiments, Pramod Kathuria, Founder and CEO of Easiloan stated, “The ULI will simplify the loan application process by integrating multiple financial institutions, including banks, non-banking financial companies (NBFCs), and digital lenders, onto a single platform. This streamlined process ensures that loan applications are processed more quickly and efficiently. Through real-time data sharing and advanced algorithms, ULI enables instant verification of borrower credentials, such as KYC (Know Your Customer) details, credit history, and income verification. This reduces the time taken for loan approval from days to mere minutes, accelerating the disbursement process.”

    The System Aims to Make Entire Lending Process Hassle Free

    Banks, account aggregators, digital identification authorities, banks, credit information businesses, and state and federal governments were among the several sources from which RBI retrieved the data needed for credit evaluation. A delay in the smooth and timely distribution of loans was caused by the data being available in several systems.

    Because of this, the entire digital platform was built with an open architecture and open APIs so that all the participants in the financial sector can connect with each other in a ‘plug and play’ fashion.

    The tech platform is the result of several pilot initiatives that started in 2022. These experiments included digital dairy loans and end-to-end digitisation of Kisan Credit Card (KCC) loans. As a result of these initiatives, the loan processing time was significantly reduced and the desired efficiency was achieved. Additional digital loans were added to the platform last year.

    Digitization Revolutionising India’s Lending Sector

    According to Das, the digital Public Tech Platform is an aspect of the central bank’s efforts to digitise banking services. “Data privacy is fully protected, and the new platform is also based on consent of potential borrowers,” he assured.

    Das mentioned that there is a new suggested trinity that would replace the old one, which consisted of Jan Dhan Accounts, Aadhaar, and mobile phones or JAM.

    He proclaimed that the Central Bank Digital Currency (CBDC), which will be introduced gradually and consists of the new trinity of JAM, UPI, and ULI, is a groundbreaking development in India’s digital public infrastructure. “This initiative streamlines the integration of multiple technical systems, which means borrowers can enjoy the benefits of easier credit delivery and faster processing times without having to provide a mountain of paperwork,” he continued.

    Lenders, customers, and data service providers are all winners with this platform. Through consent architecture, customers can acquire streamlined, personalised credit without submitting paper forms or physically visiting banks. The network effect, standardisation, cost efficiency, innovation in the loan process, scalability, and increased reach are all to the advantage of lenders and data service providers.

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    StartupTalkyNitin Konde