RBI Maintains Repo Rate at 5.25% Amid Inflation Concerns, Increases Investment Limits for NRIs and OCIs
Monetary policy: RBI retains repo rate at 5.25%, raises NRI, OCI investment limits
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The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.25% due to inflation risks from the ongoing West Asian conflict. Additionally, it has raised investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in Indian equities.
- 01The RBI lowered its GDP growth projection for FY27 from 6.9% to 6.6% and raised the CPI inflation projection from 4.6% to 5.1%.
- 02Investment limits for NRIs and OCIs in listed Indian companies have been increased from 5% to 10% for individuals and from 10% to 24% for aggregate investments.
- 03The RBI's monetary policy stance remains neutral, with ongoing monitoring of inflation and growth risks.
- 04The rupee appreciated by 50 paise to 95.24 against the US dollar following the RBI's announcements.
- 05The RBI aims to attract dollar inflows by expanding specified securities under the Fully Accessible Route (FAR).
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On Friday, Reserve Bank of India (RBI) Governor Sanjay Malhotra announced that the central bank's Monetary Policy Committee (MPC) has decided to maintain the repo rate at 5.25%. This decision reflects a cautious approach amid inflationary pressures linked to the ongoing West Asian conflict. The RBI has revised its GDP growth forecast for the fiscal year 2026-27 down to 6.6% from 6.9% and increased the Consumer Price Index (CPI) inflation projection to 5.1% from 4.6%. The MPC also doubled the individual investment limits for NRIs and OCIs in listed companies from 5% to 10%, and the aggregate ceiling from 10% to 24%. The RBI's neutral stance indicates a continued focus on monitoring economic conditions, including risks from global fuel prices and supply chain disruptions. Additionally, the rupee strengthened against the US dollar, reaching 95.24, following the RBI's policy adjustments aimed at enhancing foreign investment.
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The RBI's decision to maintain the repo rate and adjust investment limits is expected to influence economic growth and inflation, impacting household purchasing power and investment opportunities.
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