RBI’s 25 bps Rate Cut Strengthens Liquidity for NBFCs, Boosts Microfinance Access & Credit Expansion

The RBI’s decision to reduce the repo rate by 25 basis points to 5.25% marks a clear and growth-oriented shift in policy. For digital lenders and NBFCs, this move expands liquidity, lowers the overall cost of capital, and strengthens our ability to deliver faster, more efficient, and more customer-centric credit solutions across India.

A supportive rate environment also encourages responsible risk-taking within the digital lending ecosystem. It enables lenders to design more flexible and affordable credit products. For the microfinance segment as well, this reduction provides timely relief for low-income households navigating repayment challenges, with meaningful improvement expected through 2025.

Lower rates will naturally lift consumer confidence, especially among salaried and self-employed individuals who increasingly rely on NBFCs for quick and convenient credit. We anticipate rising demand for small-ticket and short-term personal loans as customers find more room in their monthly budgets.

The Monetary Policy Committee’s approach reflects a strong commitment to supporting growth while maintaining stability in the financial system. Borrowers stand to gain through lower EMIs, improved access to credit, and greater assurance in making prudent financial decisions. At Olyv, we see this as an opportunity to deepen customer trust, enhance satisfaction, and accelerate our mission of democratizing credit for the next billion hard-working and underserved Indians.

The Reserve Bank of India’s (RBI) decision to reduce the policy rate by 25 basis points (bps) to 5.25% with immediate effect is a welcome move in monetary policy at a time when the economy is doing well and inflation is under control. GDP growth accelerated to 8.3% because of strong spending during the festival, reduction in GST rates, changes in Income Tax limits, good monsoon etc. The steps taken by RBI to provide sufficient liquidity will help to provide credit at competitive rates.

In the Microfinance Industry, risk based pricing has been introduced after revised Regulations. The Microfinance borrowers having good Credit Bureau score and clean repayment track record have started getting the benefit of lower interest rates. This has also helped to send the message to the borrowers that they should keep their Credit Bureau score protected by repaying the loans on time. The reduction in RBI policy rate will help these borrowers with further reduction in interest rate. The reduced cost of funds will also help us in providing affordable credit to our SME customers and Housing Finance borrowers.

The lower borrowing cost combined with improved access to credit will help to support a strong general consumer sentiment. The RBI has set the stage for continued credit expansion over time, allowing for sustained economic growth and allowing lenders to have confidence in planning for the future. As a result of this monetary policy change, lower EMIs can be expected in the near future as lenders begin to transmit the benefit of reduced borrowing costs to their customers. Today’s actions will provide an opportunity for the broader economy to experience an infusion of credit without compromising its overall stability.