The Indian Reserve Bank's Monetary Policy Committee (MPC) has unanimously decided to maintain the policy repo rate at 5.25 percent, as announced by Governor Sanjay Malhotra on February 6, 2026. This decision comes after a 25 basis point reduction in December 2025. The MPC's stance on interest rates reflects a careful balance between economic stability and growth. The RBI's revised outlook for CPI inflation in the first quarter of 2026-27 is 4 percent, and 4.2 percent in the second quarter, an upward revision from the December projections of 3.9 percent and 4.0 percent, respectively. This adjustment is primarily attributed to rising precious metal prices, contributing significantly to the inflation outlook. The central bank has also revised real GDP growth projections, forecasting 6.9 percent in the first quarter and 7.0 percent in the second quarter of 2026-27, an increase from the previous estimates of 6.7 percent and 6.8 percent. The RBI's proactive approach extends to consumer protection, with proposed guidelines to limit customer liability in unauthorized electronic banking transactions. These guidelines aim to provide compensation of up to 25,000 rupees for small-value fraudulent transactions. Additionally, the RBI will publish a discussion paper on enhancing digital payment safety, potentially introducing lagged credits and additional authentication for specific user groups. The central bank is also addressing mis-selling practices and loan recovery, issuing comprehensive instructions to regulated entities on advertising, marketing, and sales of financial products and services. Furthermore, the RBI plans to review and harmonize conduct-related instructions on recovery agents and loan recovery, as well as announce revised guidelines for the Lead Bank Scheme, Kisan Credit Card Scheme, and the Business Correspondent Model.
