𝗥𝗕𝗜 𝗠𝗼𝘃𝗲𝘀 𝘁𝗼 𝗔𝘁𝘁𝗿𝗮𝗰𝘁 $𝟳𝟱 𝗕𝗶𝗹𝗹𝗶𝗼𝗻 𝗶𝗻 𝗙𝗿𝗲𝘀𝗵 𝗜𝗻𝗳𝗹𝗼𝘄𝘀 𝗮𝗻𝗱 𝗦𝘁𝗮𝗯𝗶𝗹𝗶𝘇𝗲 𝗥𝘂

𝗥𝗕𝗜 𝗠𝗼𝘃𝗲𝘀 𝘁𝗼 𝗔𝘁𝘁𝗿𝗮𝗰𝘁 $𝟳𝟱 𝗕𝗶𝗹𝗹𝗶𝗼𝗻 𝗶𝗻 𝗙𝗿𝗲𝘀𝗵 𝗜𝗻𝗳𝗹𝗼𝘄𝘀 𝗮𝗻𝗱 𝗦𝘁𝗮𝗯𝗶𝗹𝗶𝘇𝗲 𝗥𝘂𝗽𝗲𝗲

The Reserve Bank of India introduced new monetary policy measures. The moves aim to draw foreign capital and ease pressure on the rupee.

Analysts expect large inflows:

• SBI Research expects at least $40 billion in inflows. SBI sees the rupee moving toward 92 to 93 against the dollar.
• Kotak Securities expects $50 billion to $75 billion in inflows.

The Monetary Policy Committee left the repo rate at 5.25%. The stance stays neutral. Most analysts expect no change in August.

The RBI cut its FY27 growth forecast. Real GDP growth is now seen at 6.6%. The prior estimate was higher by 30 basis points. The third quarter growth forecast fell to 6.5%.

Inflation estimates moved up. The FY27 CPI inflation projection is now 5.1%. The prior figure was lower by 50 basis points. Core CPI inflation is now seen at 4.7%. Quarterly inflation for Q3 is pegged at 5.9%. Q4 inflation is seen at 5.4%.

SBI Research said the policy shows a stronger focus on inflation vigilance and external sector defense. The RBI said currency moves do not always match fundamentals. The bank rejected views of a drop to the 100 level.

New capital inflow measures include:

• The Fully Accessible Route now covers 15 year, 30 year, and 40 year government bonds. The 30% short maturity cap is gone.
• Rs 1.5 lakh crore in new long term bonds will be issued. Rs 4.06 lakh crore in headroom remains under the general route.
• Tax breaks on interest and capital gains for foreign portfolio investors will add Rs 4,000 to 5,000 crore plus Rs 500 to 1,000 crore in benefits.
• Kotak Securities noted relaxed equity investment limits for NRIs, OCIs, and PROIs without SEBI registration.

On external borrowing:

• The RBI will pay full hedging costs at 2.5% per year for new 3 to 5 year FCNR(B) deposits until September 30, 2026. SLR and CRR costs are also covered.
• SBI expects banks to offer rates above 5.5%. A similar program in 2013 raised $34 billion.
• A concessional forex swap facility for 3 to 5 year PSU external commercial borrowings runs until September 30. This aids firms such as PFC, REC, and NTPC. ECB and FCCB inflows fell 30% in FY26 to $42.9 billion.

The RBI cut the export proceeds timeline to 9 months from 15 months. This change speeds up forex inflows.

Markets reacted after the announcement:

• The rupee gained 50 paise.
• Government bond yields for 10 to 40 year papers fell 4 to 5 basis points.
• Corporate bond yields for 2 to 3 year papers fell 20 to 25 basis points.
• The OIS curve moved down 10 to 15 basis points.

On rates:

• SBI Research expects the RBI to look past inflation data and keep rates on hold in August. Growth concerns outweigh tightening pressure.
• Kotak Securities expects about 50 basis points in rate hikes during FY27. Inflation is seen at 5.1%. Markets have already priced in much of this.

Banking system liquidity stays in surplus at about Rs 1.39 lakh crore in June. Government cash drawdowns and seasonal currency returns during the monsoon support this trend.