Experts expect RBI to lower repo rate by 25 bps to boost MSME credit and festive spending

To increase credit flow to MSMEs and promote festive season spending, experts anticipate a 25-basis-point repo rate cut by the Reserve Bank of India (RBI) in its upcoming policy review on October 1. The expected rate cut could also bolster the overall economic growth,lanalysts believe.

Deepak Aggarwal, co-founder, co-CEO and CFO of Moneyboxx Finance Limited, said, "With inflation at multi-year lows and the recent GST rationalisation providing a breather to consumers and businesses, the RBI has room to deliver a 25-basis-point rate cut in the upcoming MPC meeting. Such a step would lower borrowing costs, spur demand, and ease credit flow—especially critical for MSMEs and small entrepreneurs in rural and semi-urban India."

According to analysts, lowering the repo rate now will reduce borrowing costs ahead of the festive season and sustain credit flow to small businesses and the housing sector. At the same time, the RBI should pair any cut with clear forward guidance and ensure that banks and NBFCs pass on the benefit quickly, while keeping an eye on risks such as rising government bond yields, high state borrowing, and pockets of sticky core inflation. This combination can anchor confidence and keep India’s growth story on track.

Rohit Arora, CEO & co-Founder, Biz2X & Biz2Credit, said, “A 25-basis-point cut at the upcoming MPC meeting would be a timely and practical step to support credit growth for MSMEs and strengthen the lending ecosystem across banks, NBFCs and fintechs. Inflation has dropped sharply, with SBI research projecting CPI near 1.1% in October, and the new GST rules implemented on September 22 already reducing tax rates on many goods and services. Together, these factors give the RBI room to ease policy without risking price stability."

“The Reserve Bank of India and the government have, this year, taken bold steps to stimulate consumer spending through measures such as REPO rate cuts, tax revisions, and GST rationalisation to boost domestic consumption,” said Shishir Baijal, chairman and managing director of Knight Frank India. “However, with the recent economic volatility, housing demand is beginning to show signs of clear moderation compared to the momentum witnessed over the past five years. To sustain this momentum and encourage buyers further, a timely rate cut could provide the much-needed boost to the housing market and help maintain the upward cycle in real estate.”