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RBI MPC decision today: repo 5.25%, CRR 3% going in — and a ₹3 lakh crore cash drain set for noon

The Reserve Bank of India’s Monetary Policy Committee announces its October decision today. Going in: repo 5.25%, SDF 5.00%, MSF and Bank Rate 5.50%, CRR 3.00%, neutral stance after a unanimous hold in August. Retail inflation has risen to 4.82% in August. The banking system is flush — RBI absorbed about ₹5.30 lakh crore on 5 Oct and has notified a ₹3 lakh crore overnight reverse repo for 12 noon, right after the policy call.

Capital Chronicle Desk~5 minDual-layer

60-sec

Decision day (Wed 7 Oct 2026 IST): The Reserve Bank of India’s Monetary Policy Committee wraps up its October 5–7 meeting today and publishes its resolution this morning. Governor Sanjay Malhotra chairs the six-member committee. Capital Chronicle will file the decision from RBI’s own statement.

Where the settings stand going in (RBI, as of 6–7 Oct):

SettingLevel
Policy repo rate5.25%
Standing Deposit Facility (SDF)5.00%
Marginal Standing Facility (MSF) / Bank Rate5.50%
Cash Reserve Ratio (CRR)3.00%
Statutory Liquidity Ratio (SLR)18.00%
Stance (August)Neutral — unanimous hold

What has changed since August:

Data pointThenNow
CPI inflationJune 4.4% (cited in August resolution)July 4.45% · August 4.82% (provisional)
Food inflation (CFPI)—August 5.95%
RBI’s Q2 FY27 CPI projection4.7%July–August average ≈ 4.6% (Capital Chronicle arithmetic)
USD/INR (FBIL reference)—96.4348 (1:00 p.m., 6 Oct)
10-year G-sec (6.94% GS 2036)—7.2150% (5 Oct)

The cash angle: RBI’s 5 Oct money-market statement shows net liquidity absorbed of ₹5,30,096 crore — the banking system is in deep surplus, and overnight rates are trading below the 5.25% repo (weighted call rate 5.09%). RBI has notified a ₹3,00,000 crore one-day Variable Rate Reverse Repo (VRRR) for 12:00–12:30 p.m. today, its largest overnight drain notice this week.

Takeaway: Watch three things this morning — the repo decision and vote, whether the stance moves off neutral, and any liquidity or CRR steps. Nothing is decided until RBI publishes. Not investment advice.

Analysis

What the August resolution set up

The 62nd MPC meeting (3–5 Aug) voted unanimously to keep the repo rate at 5.25% and retain the neutral stance. Members listed in RBI’s resolution: Governor Sanjay Malhotra, Dr. Poonam Gupta, Shri Indranil Bhattacharyya, Dr. Nagesh Kumar, Shri Saugata Bhattacharya and Prof. Ram Singh.

  • Inflation path (August projection): CPI 5.0% for FY27 — Q2 4.7%, Q3 5.9%, Q4 5.5%; Q1 FY28 5.3%. Core 4.3%.
  • Growth: real GDP 6.7% for FY27 — Q2 6.4%, Q3 6.5%, Q4 6.8%.
  • The sentence markets keep re-reading: the committee said it needed “greater clarity” on inflation, its path and composition, before acting — and that any action “would also have to consider the need for recalibration of policy rates” as underlying inflation normalises from benign levels.

Inflation since then

Official CPI data (base 2024=100) show headline inflation rising every month this year, from 2.74% in January to 3.93% in May, 4.38% in June, 4.45% in July and 4.82% in August (provisional). Rural inflation was 5.23% and urban 4.31% in August; food inflation 5.95%. The September CPI is due Mon 12 Oct — after today’s decision.

On the two months available, the July–August average of about 4.6% sits close to RBI’s 4.7% Q2 projection (Capital Chronicle arithmetic; September will complete the quarter).

Liquidity: the other half of the story

  • Monday 5 Oct (RBI money-market statement): two overnight VRRRs absorbed ₹2,10,192 crore at 5.24%; banks also parked ₹1,81,091 crore at the SDF (5.00%). Term VRRRs outstanding: ₹1,06,176 crore (30-day, from 7 Sep) and ₹36,949 crore (26-day, from 11 Sep) — both mature today, about ₹1.43 lakh crore in all (Capital Chronicle arithmetic).
  • Net position: ₹5,30,096 crore absorbed on 5 Oct; RBI’s latest net durable liquidity reading shows a surplus of ₹13,93,819 crore as on 15 Sep.
  • Tuesday 6 Oct: RBI notified ₹2,50,000 crore for an overnight VRRR but received only ₹1,92,357 crore of offers — all accepted at 5.24%. Banks offered about 77% of the notified amount (Capital Chronicle arithmetic).
  • Today: a larger ₹3,00,000 crore one-day VRRR, window 12:00 noon–12:30 p.m., reversing Thu 8 Oct.
  • Rates: the overnight segment traded at a weighted 5.07% on 5 Oct (call money 5.09%, triparty repo 5.08%) — between the SDF floor and the repo rate.

Where the surplus came from: the FCNR(B) window

RBI opened a US dollar–rupee swap facility for fresh FCNR(B) deposits on 8 June 2026 (circular RBI/2026-27/99). Banks could swap three-to-five-year non-resident foreign-currency deposits with RBI at par, at the FBIL reference rate — receiving rupees for the dollars. The window was originally open for deposits raised up to 30 Sep; on 14 Aug RBI cut it to deposits mobilised till 31 Aug, with swaps allowed till 11 Sep. The ECB and overseas-borrowing legs stay open till 31 Dec 2026.

Final tally (RBI, reported till 18 Sep):

RouteInflow
FCNR(B) deposits$132.98 billion
Overseas foreign currency borrowings (banks)$5.32 billion
External commercial borrowings$5.30 billion
Total$143.60 billion

At Tuesday’s FBIL rate, $132.98 billion is roughly ₹12.8 lakh crore — an illustration of scale only, since each swap was struck at the reference rate on its own date (Capital Chronicle arithmetic). The September-quarter updates filed this week show where some of it landed: HDFC Bank $11.5 billion and Axis Bank $10.62 billion (bank updates), and about $35 billion across five private lenders (five-bank tally) — roughly a quarter of the RBI total (Capital Chronicle arithmetic).

The tape going in

  • India, Tue 6 Oct (NSE close): Nifty 50 22,776.10 (+220.35 / +0.98%) · Nifty Bank 55,128.40 (+0.76%) · Nifty Private Bank +1.41% · Nifty PSU Bank −0.08% · Nifty Realty −0.27% · Nifty Midcap 100 +1.08% · Nifty IT −0.59% · India VIX 13.59 (−8.03%).
  • Money flows (provisional, 6 Oct): FPIs net sold ₹2,961.30 crore; DIIs net bought ₹5,088.92 crore.
  • Bonds: the 10-year benchmark 6.94% GS 2036 yielded 7.2150% on 5 Oct; 91-day T-bill 5.5199%, 364-day 6.1798%. State government bond auction on 6 Oct: ₹23,600 crore allotted against ₹25,100 crore notified, with cut-offs mostly around 7.9–8.0%.
  • US Treasuries, Tue 6 Oct: 10-year 5.27% (from 5.31% on Monday), 2-year 4.79%, 30-year 5.64%.
  • US stocks, Tue 6 Oct (indicative): S&P 500 7,818.93 (+0.58%), Nasdaq Composite 27,599.89 (+0.45%), Dow 51,521.28 (+0.49%) — the Nasdaq above Monday’s record close.
  • Oil, early Wed (indicative front-month, not settlement): WTI ~$90.4, Brent ~$101.7.

What to watch today

  1. Repo decision and vote split — and whether the stance stays neutral
  2. Revised CPI and GDP projections for FY27, especially Q3 (August had 5.9% CPI)
  3. Liquidity or CRR measures — with ₹5.3 lakh crore of surplus and a ₹3 lakh crore VRRR at noon
  4. Rate-sensitive stocks — banks, NBFCs, housing finance, realty, autos
  5. Rupee and bond yields after the statement

For borrowers, any repo change flows first into repo-linked home loans; for savers, into deposit rates over time. Not investment advice. No politics.

Sources

Business. Markets. Money. Free.
Corrections: corrections@capitalchronicle.news

India markets & business. Free.
Not personalized financial advice. Corrections: corrections@capitalchronicle.news