New Delhi: The Reserve Bank of India’s (RBI) decision to cut the repo rate by 25 basis points to 5.25 per cent is a timely, confidence‑building measure that will lower borrowing costs, support growth and exports, industry chambers said on Friday. 

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) hailed the "proactive" move as it comes at a "juncture where the Indian economy reflects a state of balanced strength, marked by robust GDP growth and contained inflationary pressures."

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The Federation of Indian Export Organisations (FIEO) welcomed the Reserve Bank of India’s decision and said that the move will enhance export competitiveness and ease liquidity constraints across the exporting community.

"This rate cut, coming after cumulative reductions of 125 bps this year, will lower borrowing costs, spur industrial expansion, and create significant employment opportunities across sectors,” said Nirmal Minda, President ASSOCHAM.

The rate cut will reduce borrowing costs for banks, enabling them to offer cheaper loans to retail and corporate customers.

Affordable financing will also strengthen NBFCs and housing finance companies

Affordable financing will also strengthen NBFCs and housing finance companies, supporting financial inclusion and expanding access to credit for underserved segments, the association said.

Developers will gain from cheaper project financing, while homebuyers will benefit from lower EMIs, boosting new launches and reducing unsold inventory.

Cheaper auto loans will stimulate demand for cars and two-wheelers, especially in rural markets. Purchases of consumer durables like appliances and electronics will also see a surge in the ongoing festive season, the release said.

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ASSOCHAM also expects MSMEs to benefit from affordable credit for expansion and working capital, as recent GST cuts further ease operational costs.

FIEO President, S.C. Ralhan, said the reduction in borrowing costs comes at a critical moment when Indian exporters are navigating volatile global demand and fluctuating input prices.

“The RBI's move will significantly lower the cost of credit for exporters, enabling them to invest more freely in working capital, technology upgradation, and international marketing efforts," Ralhan said.

Ralhan urged banks to pass the benefits of the rate cuts to exporters swiftly through reduced lending rates and faster credit disbursal, enabling the sector to realise the full impact of the monetary easing.

(IANS)