Home, Auto Loans Set to Get Cheaper as RBI Cuts Rates, Injects ₹1 Lakh Cr Liquidity

By A Staff Reporter

Home, auto and other retail loans are likely to get cheaper after the Reserve Bank of India (RBI) on Friday reduced its benchmark lending rate for the first time in six months, signalling a shift towards more accommodative monetary conditions. The central bank also announced a substantial ₹1 lakh crore liquidity injection to bolster credit flow and stabilise financial markets.

The six-member Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, voted unanimously to cut the repo rate by 25 basis points to 5.25 per cent. The committee retained its neutral policy stance, indicating flexibility for further rate adjustments depending on inflation trends and external risks.

The RBI’s decision comes as India grapples with the economic fallout of the steep 50 per cent tariffs imposed by US President Donald Trump on Indian exports. The harsh tariff regime has already dampened outbound shipments, widened the trade deficit and pushed the rupee to record lows, prompting concerns over growth momentum.

Governor Malhotra described the move as essential for supporting what he termed a “goldilocks” phase—an economy aiming to balance stable inflation with steady growth. The liquidity boost is expected to ease funding pressures on banks, improve credit availability and reinforce government measures such as GST reforms, labour rule relaxations and softened financial sector regulations.