The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) concluded its final bi-monthly meeting for the 2025–26 fiscal year on February 6, 2026. Under the leadership of Governor Sanjay Malhotra, the committee opted for a “status quo” on the policy repo rate, signaling a period of strategic patience aimed at anchoring inflation while nurturing a robust growth trajectory.
Core Monetary Decisions
The MPC unanimously voted to maintain the Policy Repo Rate at 5.25%. This follow’s a cumulative easing cycle where rates were slashed by 125 basis points over the past year.
Current Policy Rates:
- Repo Rate: 5.25%
- Standing Deposit Facility (SDF): 5.00%
- Marginal Standing Facility (MSF) & Bank Rate: 5.50%
- Policy Stance: Neutral
Analysis: The “Neutral” stance gives the RBI flexibility. By pausing, the central bank is allowing previous rate cuts to fully transmit through the banking system, ensuring that lending rates for home and personal loans remain stable without overstimulating the economy.
Growth and Inflation Outlook
The RBI struck an optimistic tone regarding the domestic economy, describing it as being in a “Goldilocks phase”—growing steadily without immediate signs of overheating.
- GDP Growth: The real GDP growth projection for FY 2025–26 was revised upward to 7.4% (from 7.3%). For the first half of FY 2026–27, growth is expected at 6.9% (Q1) and 7.0% (Q2).
- Inflation (CPI): While headline inflation remained low at 1.33% in December 2025, the RBI marginally raised its outlook for the next fiscal year. CPI inflation is projected at 4.0% in Q1 and 4.2% in Q2 of 2026–27.
The “Precious Metal” Factor: Governor Malhotra noted that the slight uptick in inflation projections is primarily due to rising prices of precious metals (Gold/Silver), which contributed approximately 60–70 basis points to the outlook.
Landmark Regulatory Reforms
Beyond interest rates, this policy introduced several structural reforms focused on Financial Inclusion and Customer Protection:
A. Digital Fraud & Customer Liability
In a massive win for digital banking users, the RBI proposed a framework to compensate customers up to ₹25,000 for losses incurred in small-value unauthorized electronic transactions.
- New Measure: Discussion papers will explore “lagged credits” (time delays) for high-risk transactions.
- Protection: Enhanced authentication layers will be introduced for vulnerable groups, specifically senior citizens.
B. Mission SAKSHAM (Sahakari Bank Kshamta Nirman)
To bolster the Urban Co-operative Bank (UCB) sector, the RBI launched Mission SAKSHAM.
- Objective: Capacity building and certification for over 1.40 lakh participants.
- Scope: Training will be delivered in regional languages to improve technical and operational resilience at the grassroots level.
C. Ease of Credit for MSMEs
The limit for collateral-free loans for Micro and Small Enterprises (MSEs) has been doubled from ₹10 lakh to ₹20 lakh, significantly improving the “Ease of Doing Business” for small entrepreneurs.
Conclusion
- The RBI has successfully anchored inflation expectations while supporting India’s position as the fastest-growing major economy.
- The next few months will be crucial to see how monetary transmission (the passing on of lower rates by banks to consumers) evolves.
- For the common man, the pause means stable EMIs, while for the economy, it signals a period of “cautious optimism.”
- The February 2026 policy reflects “Strategic Realism.” While the low current inflation (1.33%) might have justified a rate cut, the RBI chose to look ahead.
- By 2027, “base effects” (the statistical impact of last year’s high numbers) will fade, likely pushing inflation back toward the 4% target.
- Furthermore, global headwinds—including geopolitical tensions and fluctuating commodity prices—necessitate a cautious approach.
- The shift in focus toward consumer protection (fraud compensation) and institutional strengthening (Mission SAKSHAM) shows that the RBI is moving from a “crisis management” mode to a “long-term institutional building” mode.