Saturday, March 29, 2025
New Delhi, June 9, 2025 – The Reserve Bank of India (RBI) has slashed the repo rate by 50 basis points (bps) from 6.00% to 5.50%, marking its third consecutive rate cut this year. This move, led by RBI Governor Sanjay Malhotra and the Monetary Policy Committee (MPC), also includes a 100 bps reduction in the Cash Reserve Ratio (CRR), aimed at infusing ₹2.5 lakh crore of liquidity into the banking system by December 2025.
The policy stance has shifted from “accommodative” to “neutral”, signaling a more balanced and cautious approach by the central bank. According to experts, this shift reflects RBI’s intent to simultaneously support economic growth and control inflation risks.
Axis Securities highlights that the CRR cut, to be rolled out in four phases starting September 2025, will significantly boost liquidity, encouraging credit growth especially in the festive season. Suresh Darak, Founder of Bondbazaar, emphasized that sectors highly sensitive to interest rates—such as real estate, auto, and MSMEs—stand to gain substantially from the move.
RBI has revised its inflation forecast for FY26 from 4% to 3.7%, while maintaining GDP growth expectations at 6.5%. The anticipated decline in inflation, improved monsoon prospects, and potential tax reforms are expected to stimulate demand and revive credit momentum in the second half of FY26.
Experts recommend a selective investment approach in light of the elevated valuations. Axis Securities and other domestic brokerage firms favor banking and finance stocks with strong deposit franchises, solid asset quality, and stable management.
HDFC Bank
ICICI Bank
Kotak Mahindra Bank
City Union Bank
AU Small Finance Bank
Ujjivan Small Finance Bank
State Bank of India (SBI)
Bank of Baroda
Canara Bank
Bajaj Finance
Cholamandalam Investment & Finance
Shriram Finance
SBI Cards
Vinayak Magotra from Centricity Wealthtech advised focusing on sector leaders such as Voltas, Mahindra & Mahindra (M&M), Indian Hotels, InterGlobe Aviation, and premium retail brands, along with banks and NBFCs.
Ashok Chandra, MD & CEO of Punjab National Bank, stated that the CRR cut would support enhanced credit deployment, particularly in manufacturing, agriculture, MSMEs, and consumer retail segments.
With RBI’s aggressive monetary easing and strategic policy shift, banking and finance sectors appear poised for a strong rally. Investors are advised to focus on fundamentally strong stocks and consult with financial advisors before making investment decisions.
Disclaimer: The stock recommendations, suggestions, and views expressed above are those of the individual analysts or brokerage firms. Investing in the stock market involves risk. Please consult your financial advisor before investing.
