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The Reserve Bank of India (RBI) has lowered the repo rate by 25 basis points to 6%, marking its second consecutive rate cut aimed at reviving economic momentum. The move signals a shift in the central bank's monetary policy stance from neutral to accommodative in response to mounting global trade tensions and subdued domestic growth. Alongside the repo rate revision, the RBI also reduced the Standing Deposit Facility (SDF) to 5.75% and the Marginal Standing Facility (MSF) to 6.25% while maintaining the Cash Reserve Ratio (CRR) at 4%. The central bank revised India's GDP growth projection down to 6.5% for the current fiscal year.
In a bid to stimulate the slowing Indian economy, the Reserve Bank of India (RBI) cut its benchmark repo rate by 25 basis points earlier this week, bringing it down to 6%. This marks the second straight rate cut by the central bank, which has also shifted its monetary policy stance from 'neutral' to 'accommodative' , a move indicating a clear intent to support growth through easier credit availability. Advertisement
The repo rate, the interest rate at which the RBI lends to commercial banks, is now at its lowest level since late 2010. By making borrowing cheaper for banks, the central bank aims to trigger a chain reaction leading to lower interest rates on loans for consumers and businesses, thereby encouraging spending and investment across sectors such as real estate, infrastructure, and manufacturing.
This sentiment was echoed by Mr. Prashant Sharma, President of NAREDCO Maharashtra: "The RBI's decision to reduce the repo rate by 25 basis points to 6% comes as a welcome and timely move for the Indian economy. At a time when global headwinds and tariff concerns loom large, the accommodative stance by the MPC will serve as a much-needed catalyst to revive consumption and investment cycles. For the real estate sector, this signals increased affordability for homebuyers and improved liquidity conditions for developers. It will directly impact housing demand, particularly in the affordable and mid-income segments, and will boost sentiments in the real estate sector. This policy stance will further encourage transparency and trust, essential for sustainable sectoral growth."
The central bank also adjusted other key monetary policy rates. The Standing Deposit Facility (SDF) was brought down to 5.75%, and the Marginal Standing Facility (MSF) to 6.25%, though the Cash Reserve Ratio (CRR) remained unchanged at 4%.
Ms. Shraddha Kedia-Agarwal, Director of Transcon Developers, "A rate cut in a controlled inflation environment is a strategic push towards economic revival. Lower interest rates make home loans more attractive and affordable, especially in metros like Mumbai, where ticket sizes are higher. This move will act as a catalyst to improve buyer sentiment, accelerate decision-making, and will go a long way in supporting the real estate sector's momentum, particularly for end-user driven and premium housing segments. It also reaffirms the RBI's supportive approach towards economic revival through a healthy credit ecosystem."
These changes come at a time when global trade tensions, especially the imposition of steep U.S. tariffs on Chinese imports, have begun impacting emerging markets, including India. In response to these global headwinds and weakening domestic indicators, the RBI revised its GDP growth forecast for the fiscal year to 6.5%.
From a developer's perspective, Mr. Nayan A. Shah, Chairman and Managing Director of Mayfair Housing, "The reduction in repo rate is quite a relief for developers. The boost in liquidity for developers and affordability across the sector is going to massively impact the Real Estate Market. The reduced borrowing costs also give us, as developers, the confidence to go ahead and add better innovations, more projects for our customers and ensure that they are delivered an even higher standard of living than was promised to them. It also gives us some faith for the future, hoping for further relaxed repo rates in the coming times."
With monetary easing now in motion, the Indian real estate sector particularly mid-income, premium, and end-user-driven housing could experience a boost. As the cost of capital comes down, developers may also find it easier to access funds, aiding ongoing projects and new launches.
Ashish Kukreja, CEO and Founder of Homesfy.in and mymagnet.io, said "This repo rate cut to 6% is a major relief for homebuyers, as it lowers EMIs by reducing the cost of funds for banks; for an INR 80 lakh home loan, borrowers could save over INR 6.42 lakh over the loan term. New borrowers may benefit immediately, while existing ones will see the impact on their next reset date".
Stakeholders in the real estate industry, from developers to homebuyers, have welcomed the move, citing the positive impact on affordability, liquidity, and sentiment. However, the effectiveness of this monetary easing will ultimately depend on timely transmission by banks and sustained policy support in the months ahead.
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