Key Points

Majority of the Industry leaders believed that current economic conditions, marked by controlled inflation and improved growth, provide room for a modest rate cut that could boost credit flow and support key sectors like MSMEs, housing, and healthcare.

Industry points out that inflation has remained well within the RBI's comfort zone, and the economy is showing signs of steady growth.

With these conditions in place, a 25 bps cut in the repo rate, from 6 per cent to 5.75 per cent, is seen as a balanced step that could aid both borrowers and lenders.

Suresh Darak, Founder of Bondbazaar, expects a 25 basis point cut and said, "The RBI is expected to cut the repo rate by 25 basis points to 5.75 per cent to support economic growth while keeping inflation in check. It may maintain its accommodative stance, and a potential downward revision in inflation forecasts could raise expectations of further rate cuts".

Darak added that the bond market could benefit significantly from a rate cut, as falling interest rates usually push up bond prices and boost returns for investors holding government securities and other fixed-income assets.

Amit Suri, founder of AUM Wealth, noted that markets are widely expecting a 25 bps rate cut, with a possibility of another later this year if inflation continues to stay low.

"For borrowers, this is a good time to reassess their repayment strategies. If you have high-interest loans like personal loans or credit card dues, consider prepaying or consolidating them to reduce your interest burden. For home loan borrowers on floating rates, there is no urgent need to prepay. As rates ease, EMIs will reduce gradually, improving monthly cash flow," he advised.

For floating-rate home loan borrowers, Suri pointed out that EMIs may gradually decrease, improving cash flow as rates ease

Deepak Aggarwal, Co-founder, Co-CEO, and CFO of Moneyboxx Finance, echoed similar views. He believed the conditions are right for a "calibrated rate cut" that can help improve credit flow, especially for MSMEs and NBFCs working in rural and semi-urban areas.

According to him, "These businesses are foundational to local economies, and sustained, inclusive support can further drive financial resilience, employment generation, and long-term economic vitality across underserved segments."

Vimal Nadar, National Director and Head of Research, Colliers India believes that rate cut will spur housing demand.

"A third consecutive reduction in benchmark lending rates can spur homebuyers' sentiment and resultantly improve housing demand particularly in affordable and middle-income segments. For developers too, the rate cut could aid in gradual inventory clearance and offer financial relief by lowering of borrowing costs."

However, not all voices expect an immediate cut. Pramod Kathuria, CEO of Easiloan, believed the RBI may hold the repo rate at 6.5 per cent to balance growth with inflation concerns.

"Despite the recent GDP growth numbers sustained and core inflation contained, threats to food inflation and uncertainty with regard to the monsoons are likely to keep the central bank on its toes," he said.

Sahil Lakshmanan, Chief Business Officer at CarePal Money, highlighted the importance of the current policy decision for the healthcare finance sector.

"A sustained low-rate environment would significantly benefit the healthcare financing sector by reducing borrowing costs, enabling us to offer more affordable loans to individuals and small businesses facing medical expenses," he said.

Despite contrary views on rate cut, Industry leaders believes that the central bank will take growth-friendly approach, while keeping inflation under close watch.

- ANI