Reserve Bank Governor asks banks to pass on rate cut to customers

Mumbai: RBI Governor Sanjay Malhotra on Tuesday met MDs and CEOs of public sector banks and select private lenders, urging them to pass on recent rate cuts to bolster sustainable growth. The RBI has reduced the policy rate by 125 basis points since February 2025 to 5.25 per cent, as India posted 8 per cent GDP growth in the first half of the fiscal year.

Malhotra noted that the banking sector has strengthened in 2025 but cautioned banks to stay vigilant amid evolving risks. He said the rate cuts, along with increased adoption of technology, should help lower intermediation costs, improve efficiency and enhance financial inclusion.

Stressing better customer service, he asked banks to reduce grievances and reinforce internal processes. Highlighting rising digital fraud, he called for stronger, intelligence-led security measures. He also appreciated banks’ progress on re-KYC and unclaimed deposits, urging continued outreach.

Deputy Governors T Rabi Sankar, Swaminathan J, Poonam Gupta and S C Murmu, along with senior RBI officials, attended the meeting. Agencies