Corporates are increasingly relying on the bond market to raise funds as the transmission of policy rate cuts is faster in the money market compared to banks, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Wednesday while announcing the policy rates.
The transmission of policy rate cuts by the Reserve Bank of India (RBI) is visible in the outstanding books of banks and fresh loans are given at relatively higher margins, according to a recent report by CareEdge Ratings.
The RBI has already frontloaded the rate cuts, anticipating the moderation in inflation, and it is unlikely the central bank would go for further rate cuts unless economic growth concerns aggravate, CareEdge said in a pre-monetary policy review meeting.
Indian banks witnessed significant gains in market capitalization during the April-June quarter of 2025, driven by falling interest rates and increased liquidity, which collectively attracted investor confidence.
With a 100 basis point repo rate cut by the Reserve Bank of India (RBI) since February, Credit offtake and deposit growth have cooled, noted a report by CareEdge.
Rating agency Crisil has revised India's gross domestic product (GDP) growth to 6.5 per cent for the current fiscal, supported by expectations of above-normal monsoon, rate cuts and the government's rural support schemes.
As the US Federal Reserve gears up for its latest policy announcements, economists and market experts believe that the central bank is likely to keep interest rates unchanged, while keeping the door open for future rate cuts later this year.
This year, the Reserve Bank of India (RBI) slashed policy rates by 100 basis points and cut CRR by 100 basis points, thereby injecting significant liquidity into the financial system.
Weakening wage and job growth cycle is impacting consumption sentiment, and tax cuts and rate cuts will help accelerate momentum, according to the ICICI Bank Global Markets report.
The Indian bond market is showing signs of strength, driven by easing inflation and expectations of more interest rate cuts from the Reserve Bank of India (RBI), says a report by Jefferies.