Following the policy outcome, the Bank Nifty surged over 1.5% to hit a new all-time high of 56,695. Shares of several banks, including Axis Bank, IndusInd Bank, and PNB, among others, ticked higher, with IDFC First Bank rising nearly 7% to emerge as the top gainer in the pack.
Although the RBI’s steep 50 basis point rate cut was helpful for all borrowers, not only those making home loan EMIs, it immediately put pressure on banks’ net interest margins (NIMs). However, these concerns over shrinking NIMs of banks were offset by the RBI’s supportive move: a 100 bps cut in the Cash Reserve Ratio (CRR), which helped balance the impact and turned the tide for lenders.
The move to reduce CRR by 100 bps over four tranches starting September 6, 2025, is expected to inject Rs 2.5 lakh crore into the banking system. This is likely to boost liquidity, lower borrowing costs, and encourage corporates to step up capital expenditure.
This is RBI’s third consecutive interest rate cut. Easing inflation has created room for the central bank to prioritise economic growth.
“By lowering both the price (repo) and quantity (CRR) of money, the RBI has flattened the transmission curve,” said Arsh Mogre, Economist at PL Capital. “The CRR cut in particular offsets short-term pressures on bank margins from lower rates.”At a time when monetary transmission has often been patchy, experts say this combo-move—a rate cut plus liquidity easing—could finally push banks to pass on the benefits more effectively.India’s largest private lender, HDFC Bank, reported better-than-expected results for the January–March 2025 quarter on April 19, with net profit rising 6.7% year-on-year to Rs 17,616 crore and net interest income growing 10.3% to Rs 32,066 crore.
According to Trendlyne, the stock has a share price target of Rs 2,162 and a projected profit growth of 9.6% for FY26, based on the top 41 analyst calls.
In addition, capital markets regulator Securities and Exchange Board of India (Sebi) has also approved the Rs 12,500 crore initial public offering of HDB Financial Services, a subsidiary of HDFC Bank.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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