RBI Slashes Repo Rate to 6% Again; UPI Transaction Limit Revised to Ease Pressure on Middle Class

New Delhi, April 9, 2025 — In a major relief to the middle class, the Reserve Bank of India (RBI) has announced a 0.25% reduction in the repo rate, bringing it down to 6%, during its Monetary Policy Committee (MPC) meeting. This marks the second consecutive cut following February’s similar revision and is expected to lower EMIs on home, auto, and personal loans.

Alongside the rate cut, RBI has also approved key changes in the UPI transaction limit, streamlining digital payments and giving a further boost to India’s evolving fintech ecosystem.

Key Announcements from RBI MPC Meeting

The RBI’s MPC concluded its first policy review of FY 2025-26 with several noteworthy declarations:

• Repo Rate Reduced to 6%: A 25-basis-point cut, the second in succession, brings the key lending rate to its lowest level since 2020.

• Stance Shifted to Accommodative: The central bank changed its policy stance from “neutral” to “accommodative,” signaling the potential for further rate cuts.

• GDP Growth Forecast Lowered: The growth forecast for FY26 was revised from 6.7% to 6.5%, reflecting global uncertainties and trade pressures.

• Inflation Target Cut: Inflation projection reduced from 4.2% to 4%, citing stable pricing trends in food and fuel.

Revised UPI Limits: Major Boost for Digital Transactions

The RBI has revised UPI transaction limits specifically for person-to-merchant (P2M) payments in sectors such as capital markets, insurance, tax payments, and educational institutions:

• UPI P2M Limit raised to ₹5 lakh for specific sectors like taxes and IPOs.

• Regular P2P (person-to-person) UPI transfer limit remains at ₹1 lakh.

• The NPCI has been authorized to modify transaction caps based on evolving needs and user demand.

Gold Loan and Co-Lending Framework Updates

• Gold-Backed Loans: The RBI has issued draft guidelines for lending against gold to ensure regulatory consistency without tightening access.

• Co-Lending Expansion: A broader co-lending framework is in the works, allowing more institutions to participate in shared-lending models for increased credit availability.

• Stressed Asset Framework: RBI has proposed a new Securitization of Stressed Assets Framework to help banks offload non-performing loans via securitized products, improving asset quality.

What It Means for Borrowers and the Economy

This policy decision is expected to ease the EMI burden on middle-class families, encourage housing and auto loan uptake, and increase liquidity for banks and NBFCs. Additionally, the expanded UPI limits will accelerate India’s digital payment penetration, especially in semi-urban and rural markets.

Next RBI MPC Meeting

The next MPC meeting is scheduled from June 4 to June 6, 2025, where further policy decisions aligned with macroeconomic indicators will be discussed.