In line with the market expectations, the Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday cut the repo rate by 50 basis points (bps) to 5.5%, marking the third consecutive rate reduction this year. The panel further decided to shift its stance from accommodative to neutral.
A neutral stance typically signifies that the prevailing economic conditions do not necessitate either tightening to control inflation or easing to stimulate growth, thereby offering flexibility for future policy action. In contrast, an accommodative stance indicates a willingness to adjust monetary policy to support growth, especially when inflation remains within the target range.
Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) were adjusted to 5.25% and the marginal standing facility (MSF) rate and the Bank Rate to 5.75%.
RBI MPC Meeting June 2025 Key Highlights & Announcements:
Following are the highlights of the bi-monthly monetary policy announced by the Reserve Bank of India Governor Sanjay Malhotra on 6th June 2025: RBI cuts repo rate by 50 bps to 5.50% Inflation revised down to 3.7% from earlier 4%o
RBI cuts repo rate by 50 bps to 5.50%
Inflation revised down to 3.7% from earlier 4%
Near term & medium term outlook gives confidence on durable alignment with 4% target
Growth estimated FY’25 at 6.5 pc and in FY26 growth remains strong
Non-gold imports posted double digit growth
FY26 GDP at 6.5%, Q1 is 6.1%, Q2 is 6.7%, Q3 is 6.6% & Q4 is 6.3%
CPI inflation for FY26 revised to 3.7% versus 4% earlier
Inflation projection for Q4 is 4.4 pc
Gross FDI increased 14% in FY25
Forex reserves stood at $691.5 bn
SDF balances are averaging Rs 2 lakh cr in the last 2 months
Cash Reserve Ratio reduced by 100 bps to 3% from 4%
CRR cut will release primary liquidity of ₹2.5 lakh crore
From 4% to 3% od deposits in four tranches of 25 bps each
CR cuts will be done in a staggered manner in four tranches of 25 bps each
Both inflation & growth, Indian economy is progressing well
Look at changed Key Policy Rates
| CRR | 3.00% |
| SLR | 18% |
| Repo rate | 5.50% |
| SDF* | 5.25% |
| Reverse repo rate | 3.35% |
| Bank Rate | 5.75% |
| MSF Rate (Marginal Standing Facility Rate) | 5.75% |
*SDF is the new floor for policy rates introduced by RBI in April 2022, as a mechanism to curb inflation by absorbing liquidity. The SDF rate is applied for which banks park their excess funds with the RBI without any collateral. Although, earlier system of reverse repo rate will remain as part of RBI’s toolkit and its operation will be at the discretion of the RBI for purposes specified from time to time, according to RBI’s announcement. This move of RBI makes the reverse repo rate redundant for now.
Revision of Penal Interest on Shortfall in CRR and SLR Requirements – Change in Bank Rate
Pursuant to the announcement made in the Monetary Policy Statement for 2025-26 dated June 6, 2025, the Bank Rate has been reduced by 50 basis points—from 6.25 per cent to 5.75 per cent—with immediate effect.
Consequently, all penal interest rates applicable to shortfalls in the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), which are explicitly linked to the Bank Rate, stand revised as follows:
| Item | Existing Rate | Revised Rate (Effective Immediately) |
| Penal interest rates on shortfalls in reserve requirements (depending on the duration of the shortfall) | Bank Rate + 3.00 percentage points (9.25%) or Bank Rate + 5.00 percentage points (11.25%) | Bank Rate + 3.00 percentage points (8.75%) or Bank Rate + 5.00 percentage points (10.75%) |
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