RBI Pushes For Global Rupee, Nepal, Sri Lanka, Bhutan To Trade In INR

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, announced key decisions and proposals during its October 2025 meeting. 

These announcements reflect the RBI's focus on balancing economic growth, controlling inflation, and strengthening the financial ecosystem. Below is a clear and concise overview of the major outcomes and proposals from the meeting.

Repo Rate Unchanged at 5.5%

The MPC unanimously decided to maintain the repo rate at 5.5% and retain its “neutral” stance. This decision aligns with market expectations, given India's robust economic growth and inflation remaining within the RBI’s acceptable limits.

RBI Revised FY26 GDP Projections

The RBI increased its FY26 GDP growth projection to 6.8% from the previous 6.5% and lowered the FY26 CPI inflation forecast to 2.6% from 3.1%.
Key Regulatory Proposals

The RBI introduced several forward-looking proposals to strengthen India’s financial system and promote economic growth:

Regulatory Changes in Lending Against Securities

The RBI proposed reforms to streamline and regulate lending practices against securities.

The central bank has proposed eliminating the cap on loans backed by listed debt securities, raising the lending limit against shares from ₹20 lakh to ₹1 crore per individual, and increasing IPO financing limits from ₹10 lakh to ₹25 lakh per person.

Internationalisation of the Indian Rupee

This includes initiatives to increase its use in international trade and financial transactions.

Banks in Bhutan, Nepal, and Sri Lanka will now be allowed to lend in Indian rupees to Non-Resident Indians (NRIs), said the RBI Governor.

Risk-Based Insurance Premiums for Banks

To encourage sound risk management, the RBI proposed a risk-based insurance premium framework for banks. This approach incentivizes banks to adopt robust risk mitigation practices by linking premiums to their risk profiles. 

The central bank proposed introducing risk-based deposit insurance premiums to lower costs for higher-rated banks.

Measures to Improve Credit Flow

The RBI announced initiatives to enhance credit availability for businesses and individuals, aiming to support economic growth and ensure smoother access to financing. 

It will also relax the regulatory ceiling on lending against the listed debt securities to intensify lending flexibility, besides the central bank will soon be publishing a discussion paper on licensing new urban cooperative banks (UCBs).

Also Read: RBI MPC Keeps Repo Rate "Unchanged", Retains "Neutral" Stance -

The RBI’s October 2025 MPC meeting decisions reflect a balanced approach to fostering economic growth while keeping inflation in check. 

By maintaining the repo rate at 5.5%, removing lending caps on listed debt securities, and proposing new UCB licensing, the RBI aims to enhance financial flexibility and inclusion. 

The focus on internationalizing the Rupee and improving credit flow further signals a proactive stance toward sustainable growth.