2 hrs ago
RBI Says Rate Hike May Moderate Credit Growth, Not Expansion
India’s central bank raised its main interest rate by 0.25 percentage points.
This may make borrowing more expensive over time.
The bank says it usually takes about two quarters for rate changes to affect the rates borrowers pay.
That could slow the very fast pace at which banks are lending.
But officials said lending should remain strong enough to support the economy.
The central bank also said it is not planning to cut rates soon.
It will consider conditions in India as well as what is happening around the world.
It said it prefers tools other than raising banks’ required cash reserves to manage extra money in the system.
The Reserve Bank of India raised the repo rate by 0.25 percentage points and shifted its policy stance to “calibrated tightening.”
Deputy Governor Swaminathan J said rate changes typically take about two quarters to reach borrowers’ lending rates.
He said some moderation from current credit growth above 18% would still support economic growth; the article gives a 10-year average of 12–14%.
Governor Sanjay Malhotra said credit growth should remain strong and that small changes in its pace should not matter greatly overall.
Malhotra said domestic growth and inflation will guide RBI decisions, while global conditions are also considered; he ruled out near-term rate cuts.
- Who
- The Reserve Bank of India, including Governor Sanjay Malhotra and Deputy Governor Swaminathan J.
- What
- The RBI raised the repo rate by 0.25 percentage points and said credit growth may moderate without undermining broader economic expansion.
- Where
- India.
- When
- Wednesday; the article was published October 7, 2026.
- Why
- The RBI said its monetary policy decisions are guided by India's growth-inflation dynamics, while also taking global factors into account.
Key facts
- Repo rate change
- Up 0.25 percentage points
- Policy stance
- Changed to “calibrated tightening”
- Current credit growth
- More than 18% according to the article
- Ten-year average credit growth
- 12–14%
- Typical rate transmission
- About two quarters for changes to reach actual lending rates
- Near-term rate cuts
- Malhotra said people should not expect them in the near term
- Liquidity tools cited
- Variable reverse repo auctions and open market operations purchases
Quotes
Sanjay Malhotra
Reserve Bank of India governor
“Will it (credit growth) moderate going forward? I think it (credit growth) will continue to be strong. A few percentage points here and there should not really matter too much in the overall scheme of things.”
thehindubusinessline.com
“Some moderation will occur relating to demand as well as rate (hike) together. But the moderation from 18 to 20 per cent (credit growth) is not bad and will be adequate enough to support growth.”
thehindubusinessline.com
Sources
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