₹1 lakh crore OMO purchases along with the 3-year USD/INR buy-sell swap will support liquidity and monetary transmission
The Reserve Bank of India’s (RBI) 25 basis points (bps) repo rate cut will support consumption, investment, and reduce funding costs for corporates, according to senior bankers.
State Bank of India (SBI) Chairman CS Setty said the decision to cut rates while keeping the door open for further easing helps cushion the economy against unexpected shocks or external headwinds. “The move reinforces the structural drivers of a ‘higher-for-longer’ growth trajectory across investment, credit and consumption,” he said.
He added that concurrent liquidity-management steps are designed to anchor money-market rates and lower borrowing costs. “Together, the rate cut, neutral stance and targeted liquidity interventions aim to sustain economic momentum while safeguarding price and financial stability.”
Housing, MSMes to gain
Indian Overseas Bank MD & CEO Ajay Kumar Srivastava said the rate cut is expected to ease borrowing costs, spur demand in housing and real estate, support MSMEs and sustain growth in personal and auto loans.
“Bank credit growth remains healthy at 11 per cent, and overall credit from bank and non-bank sources has grown 13.1 per cent. The RBI’s ₹1 lakh crore OMO purchases and the 3-year USD/INR buy-sell swap will support liquidity and monetary transmission. These steps will encourage domestic investment and deepen financial access,” he said.
long-term swap
Manappuram Finance MD & Chairman V.P. Nandakumar noted that with price pressures stabilising and liquidity improving, the move aims to lift consumption and investment at a time when growth momentum has moderated. Lower policy rates typically reduce borrowing costs for home loans, autos, MSME credit and working-capital financing, helping households and small businesses manage cash flows more comfortably, though full transmission may take a few weeks.
He added that the introduction of the three-year rupee-dollar sell swap adds another layer of support. “By infusing longer-term liquidity without unsettling short-term rates, the RBI is ensuring banks have room to lend more comfortably. This should help lower funding costs further and improve liquidity conditions for both consumers and small businesses.”
“From a wider economic standpoint, the cut strengthens the pro-growth environment. Bond yields generally soften, credit demand improves, and sectors heavily dependent on financing — such as real estate, autos and NBFCs — stand to benefit from lower EMIs and better borrowing conditions,” he said.
Published on December 5, 2025
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