RBI’s Bold Rate Cuts: Will Banks Fuel India’s Growth Engine?

INDIA NEWS

By Aniket Chakraborty June 11, 2025 Arrow

The goal: spark credit, boost MSME investments, and revive urban consumption amid global volatility.

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India’s MSME sector drives 29% of GDP and 60% of jobs—but gets just 16% of total bank credit.

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The CRR cut could unlock ₹500–₹600 billion in liquidity for lending and capital formation.

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Most SME and retail loans are repo-linked, meaning borrowers will feel the impact quickly.

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But will banks lend? Many still see SMEs as high-risk, favoring big firms and bond markets.

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RBI’s real challenge: shift lending focus from large corporates to credit-starved small firms.

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Retail credit areas—like gold loans, MSME lending, and mortgages—are expected to see a pickup.

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Some analysts warn this easing may only lift consumption, not private investment or capex.

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RBI has fired its shot—now it’s on banks and borrowers to turn liquidity into growth.

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