By Shri. Ajay Kumar Srivastava, Managing Director & CEO, Indian Overseas Bank
“The RBI’s decision to raise the repo rate by 25 basis points to 5.50% is a measured and pre-emptive step. With CPI inflation projected at 5.2% for FY27 and supply-side pressures from energy prices, a deficient monsoon and El Niño conditions persisting, the MPC has acted to contain the risk of price pressures becoming more broad-based. The shift to a calibrated tightening stance is equally significant, signalling that rate cuts are off the table for now and that further policy action will depend on how growth and underlying inflation evolve.
At the same time, the domestic economy remains resilient, with GDP growth projected at 7.1% for FY27 following 7.8% growth in the first quarter. The strength in domestic growth provides some cushion as monetary conditions tighten, while robust credit flows and continued investment activity remain encouraging.
Higher rates will naturally have implications for borrowers, particularly home loan customers, and small businesses. Banks will need to balance the transmission of higher rates while continuing to support productive credit demand. At Indian Overseas Bank, we will remain transparent with our customers as policy rates transmit through the system, while continuing to offer competitive value to our depositors. Price stability remains fundamental to sustainable growth, and the banking system remains well placed to support India’s growth and investment.”