The Reserve Bank of India’s latest monetary policy statement is being hailed as a landmark move that goes beyond conventional rate decisions to usher in broad market-oriented reforms. C.S. Setty, Chairman of State Bank of India (SBI) and the Indian Banks Association (IBA), called the policy “an authoritative one,” signalling a strategic shift in India’s financial regulatory approach.
Setty highlighted several progressive steps, including the introduction of a risk-based deposit insurance premium, which he said would significantly improve the profitability of well-managed banks. “This change aligns the cost of deposit insurance with the risk profile of banks, thereby rewarding sound financial management,” he said.
Further, the withdrawal of the framework related to specified borrowers and the allowance for Indian banks to finance mergers and acquisitions (M&A) were described as “growth-accretive.” Setty believes these reforms will encourage stronger credit flow and stimulate business consolidation in key sectors.
On the international trade front, the RBI extended timelines for repatriation from foreign currency accounts of Indian exporters operating in the International Financial Services Centre (IFSC) and allowed greater flexibility in Merchanting Trade Transactions. Simplification of reconciliation procedures in trade portals like EDPMS and IDPMS was also welcomed, with Setty noting that these measures would “enhance ease of doing business” for exporters.
Additionally, he praised the RBI’s efforts toward enhancing the use of the Indian Rupee in cross-border transactions, noting this will help strengthen India’s position in the global financial ecosystem.
According to a research note from SBI’s Economic Research Department, the MPC’s unanimous decision to maintain status quo on the repo rate reflects a dynamic approach to policymaking that extends beyond monetary levers. The report emphasized the supportive role of benign external conditions and comfortable liquidity in enabling these reforms.
The SBI research team also projected lower inflation for FY26 and FY27, supporting the central bank’s decision to hold rates. However, it noted that while the RBI’s communication suggests openness to future rate cuts, the exact timing remains uncertain.
Overall, the RBI’s policy direction signals a clear intent to deepen structural reforms, broaden credit access, and reinforce India’s position in global finance.
