Once again the Reserve Bank of India’s (RBI) interest rates are projected to be cut during the June 6 meeting with a second cut expected in August. This indicates that the central bank plans to lower rates for the third time in a row and this shows increased urgency to provide support to a weakening economy. For borrowers especially, MSME, this is always both an opportunity and a warning.
What The Polls Have Done
A Reuters poll from May 19-28 indicated that an overwhelming majority (53 of 61 economists) sourced from across the globe believed that the RBI would cut the repo rate to 5.75% this June. Over 80% of economists expect a further reduction to 5.50% in August.
Why Is the RBI Cutting Rates?
GDP growth for India has sharply declined to 6.3% in FY24 from 9% the previous year. Inflation is still under control and well below the 4% target set by the RBI giving the bank a reason to now start adopting supportive measures.
In the context of international trade conflicts such as the trade war initiated by the US, India’s export-driven sectors could be adversely impacted. In this regard, the RBI is predicted to ease monetary policy on the basis of business cycle fluctuations to stimulate domestic demand and make credit more available.
What Does This Mean for Borrowers?
For MSMEs, builders, and other credit dependent entrepreneurs, an interest rate decline could allow:
- Reduction in capital and long-term working loan expense.
- Qualifying for loans to improve with decreased EMIs.
- Less cumbersome refinancing or restructuring of existing high-interest debt.
Although, there are still a number of barriers that need to be solved like slow policy transmission. Steps taken in the past regarding interest rate cuts have not yielded the intended outcome, that is, reduced lending rates, especially where there is restricted liquidity in the banking system.
Also Read: RBI Slashes Repo Rate to 6%: Growth Gets a Green Light!
Are Banks Passing on the Benefits?
As Yes Bank’s Chief Economist Indranil Pan pointed out, the February rate cut didn’t significantly lower lending rates. While deposit rates have fallen, it’s unclear if this reflects policy transmission or deeper liquidity stress in the banking system.
This is why platforms like OneNDF matter. We help borrowers navigate the changing lending landscape by comparing real-time offers across top banks and NBFCs, ensuring that rate cuts turn into real benefits.
The Road Ahead
Even with subdued inflation and slower growth, the RBI’s current easing cycle is expected to be the shortest and shallowest in over a decade, with a total reduction of just 100 basis points.
Yet, optimism remains: a separate Reuters poll forecasted that Indian stock markets would hit new highs by the end of 2025, reflecting continued investor confidence in the long-term growth story.
How OneNDF Can Help
At OneNDF, we work with MSMEs, builders, and professionals to:
• Get faster access to secured and customized loans.
• Benchmark offers across multiple lenders instantly.
• Stay updated on policy changes and market trends.
• Optimize your loan mix for cost-effective growth.
Final Word
If you’re planning to borrow or refinance in the next few months, this rate cycle could work in your favor—but only if you act strategically. With interest rates poised to drop further, now is the time to reassess your loan structure and financing needs.
Connect with a OneNDF expert today to evaluate your best options in this evolving rate environment.
