RBI MPC October 2025: Repo Rate Held at 5.5%, GDP Raised to 6.8%
Why in the news
The Monetary Policy Committee left rates alone on October 1, 2025, citing tariff uncertainty, the need to gauge earlier cuts, and a brighter domestic outlook. The RBI also announced several regulatory changes.
Key facts
- Repo rate: 5.50%, unchanged; stance neutral.
- Cuts of 100 bps in Feb, April and June 2025 took the rate from 6.5% to 5.5%.
- GDP (FY26) projection: 6.8% versus 6.5% earlier.
- CPI inflation (FY26) projection: 2.6% versus 3.1% earlier.
- Expected Credit Loss (ECL) framework for all scheduled commercial banks from April 1, 2027.
- Revised Basel III capital rules also from April 1, 2027.
Capital market lending limits
| Facility | Old limit | New limit |
|---|---|---|
| Lending against shares (per person) | ₹20 lakh | ₹1 crore |
| IPO financing (per person) | ₹10 lakh | ₹25 lakh |
- The ceiling on lending against listed debt securities is to be removed.
Other announcements
- Curbs on overlap between banks and their group entities will be removed.
- A risk-based, differentiated deposit insurance premium will be brought in for banks.
Rationale
Tariff uncertainty may hurt exports, GST rationalisation should ease inflation and lift demand, and global headwinds persist.
Significance
- A steady repo rate keeps EMIs unchanged and supports investment.
- Higher limits should widen retail and HNI participation in markets.
Key terms
| Term | Meaning |
|---|---|
| Repo rate | Rate at which the RBI lends short-term funds to banks against government securities |
| ECL framework | Banks provision for expected losses in advance rather than waiting for default |
| Basel III | International norms on capital adequacy, leverage and liquidity |
Exam angle
- Repo at 5.50% after two straight pauses; stance neutral.
- Effective date for ECL and Basel III: April 1, 2027.
- Share-backed loan cap: ₹1 crore; IPO financing cap: ₹25 lakh.