Placing customer safety at the centre of its first policy announcement of 2026, the Reserve Bank of India on Thursday rolled out a series of consumer protection measures while keeping the policy repo rate unchanged at 5.25%. RBI proposed a framework to compensate customers for losses of up to ₹25,000 arising from small-value fraudulent transactions.
Announcing the decision, RBI governor Sanjay Malhotra says the central bank would move to tighten rules on mis-selling, regulate recovery practices and cap customer liability in unauthorised digital banking transactions. The monetary policy committee (MPC), meanwhile, unanimously voted to retain the existing rate structure and continue with a neutral stance, citing strong growth momentum and a benign inflation outlook.
The policy decision comes at a time of heightened global uncertainty, marked by geopolitical tensions and trade disruptions. Despite these headwinds, Mr Malhotra says the Indian economy remains 'in a good spot', supported by resilient domestic demand and easing price pressures.
Rates Unchanged, Stance Remains Neutral
The MPC voted to keep the repo rate at 5.25%, with the standing deposit facility rate at 5.00% and the marginal standing facility (MSF) and bank rate at 5.50%. According to RBI, the current policy setting remains appropriate given the balance of risks to growth and inflation.
Headline inflation remained within the tolerance band in November and December, largely due to deflation in food prices. CPI inflation is now projected at 4.0% in the first quarter of 2026–27 and 4.2% in the second quarter, levels that remain close to the medium-term target.
RBI noted that a marginal upward revision in the near-term inflation outlook is largely due to a sharp rise in precious metal prices, while underlying inflation pressures continue to be subdued.
Growth Outlook Remains Firm
According to the governor, economic activity has remained resilient, with real gross domestic product (GDP) growth projected at 7.4% for FY25–26. Private consumption and fixed investment continue to anchor growth even as net exports weigh on overall momentum due to faster import growth, he added.
RBI has revised upward its growth projections for the first half of FY26–27, pegging growth at 6.9% in the first quarter (Q1) and 7.0% in the second quarter (Q2). Full-year projections will be announced in April, after the release of the new GDP series later this month, RBI says.
Consumer Protection Takes Centre Stage
Beyond interest rates, the policy statement placed sharp emphasis on consumer protection. RBI governor says, "For customer protection, we will issue three draft guidelines: one, relating to mis-selling; two, regarding recovery of loans and engagement of recovery agents and three, on limiting liability of customers in unauthorised electronic banking transactions. It is also proposed to introduce a framework to compensate customers up to an amount of ₹25,000 for loss incurred in small-value fraudulent transactions.
"We will also publish a discussion paper on possible measures to enhance the safety of digital payments. Such measures may include lagged credits and additional authentication for a specific class of users, like senior citizens," he added.
Credit Push and Liquidity Support
To improve credit flow, RBI proposed increasing the limit for collateral-free loans to MSMEs from ₹10 lakh to ₹20 lakh and allowing banks to lend to REITs under prudential safeguards. Several steps are also announced to ease compliance for select non-banking finance companies (NBFCs) and strengthen urban cooperative banks (UCBs).
The central bank says it would remain proactive on liquidity management and ensure sufficient funds in the banking system to support productive economic activity and smooth monetary policy transmission.
Mr Malhotra says benign inflation provides the RBI with the space to remain growth-supportive while preserving financial stability, even as global uncertainties continue to cloud the outlook.
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