The RBI Monetary Policy February 2026 announcement maintained the status quo on interest rates while introducing regulatory and financial-sector measures aimed at sustaining growth, supporting financial stability, and expanding credit access across sectors including real estate, MSMEs, NBFCs, and cooperative banks.
The Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, voted unanimously to keep the policy repo rate unchanged at 5.25%, with the Standing Deposit Facility (SDF) rate at 5% and the Marginal Standing Facility (MSF) rate and bank rate at 5.5%. The MPC also retained its neutral stance.
Governor Malhotra said, “Amidst heightened geopolitical tension and elevated uncertainty, the Indian economy is in a good spot with strong growth and low inflation.”
RBI Monetary Policy February 2026: Growth Outlook Remains Strong
The RBI noted that India’s economy continues on a steady growth trajectory, supported by domestic demand, services sector resilience, and improving manufacturing activity.
Real GDP growth is expected to reach 7.4% this year, while real GVA growth is estimated at 7.3%, driven largely by services and a revival in manufacturing.
Looking ahead, projections for Q1 and Q2 of FY2026-27 have been revised upward to 6.9% and 7% respectively, with risks assessed as evenly balanced.
Governor Malhotra said agricultural activity is expected to remain strong due to healthy reservoir levels, robust rabi sowing, and improved crop conditions, while high capacity utilization, accelerating bank credit, and infrastructure spending are likely to support investment momentum.
He also highlighted that trade agreements with the European Union and the United States, along with other bilateral arrangements, are expected to support exports over the medium term.
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RBI Monetary Policy February 2026: Inflation Outlook Remains Benign
Headline inflation remained below the tolerance band in recent months. The RBI projected CPI inflation for FY2025-26 at 2.1%, with Q4 at 3.2%.
For FY2026-27, inflation projections stand at:
- Q1: 4%
- Q2: 4.2%
The RBI noted that the slight upward revision in inflation outlook is primarily due to an increase in prices of precious metals, while underlying inflation pressures remain muted.
Governor Malhotra said, “Benign inflation provides the leeway to remain growth supportive while preserving financial stability.”
RBI Monetary Policy February 2026: External Sector Remains Resilient
India’s external sector continues to show resilience despite global uncertainty.
Key indicators include:
- Merchandise exports growth of 1.9% year-on-year in Q3 FY2025-26
- Imports growth of 7.9%, widening the trade deficit
- Strong services exports and remittances
- Forex reserves at $723.8 billion as of January 30, 2026, covering more than 11 months of imports
The RBI said India remains an attractive destination for greenfield investments, supported by rising FDI inflows.
RBI Monetary Policy February 2026: Liquidity and Financial Stability
System liquidity remained in surplus, averaging around ₹70,000 crore since the December 2025 MPC meeting, with levels rising to nearly ₹2 lakh crore in February.
Bank lending rates have declined by about 105 basis points following cumulative repo rate reductions, while deposit rates have also moderated.
Financial stability indicators across banks and NBFCs remain strong, with credit growth rising to 13.8% compared to 11.6% a year earlier, supported by lending to retail, services, MSMEs, and large industries.
RBI Monetary Policy February 2026: Key Policy Measures Announced
The RBI announced multiple initiatives focused on customer protection, financial inclusion, credit expansion, and financial market development.
- Customer Protection Measures
- Draft guidelines on misselling
- Guidelines on loan recovery practices
- Customer liability framework for unauthorized electronic transactions
- Compensation framework of up to ₹25,000 for small-value fraud losses
- Discussion paper on digital payment safety measures
- Financial Inclusion Initiatives
- Review of Lead Bank Scheme, Kisan Credit Card Scheme, and Business Correspondent Model
- Launch of a unified portal for Lead Bank Scheme data
- Increase in collateral-free MSME loan limit from ₹10 lakh to ₹20 lakh
RBI Monetary Policy February 2026: Real Estate Financing
The RBI proposed allowing banks to lend directly to Real Estate Investment Trusts (REITs) with safeguards, aligning them with existing provisions for infrastructure investment trusts.
RBI Monetary Policy February 2026: Measures for UCBs and NBFCs
For Urban Cooperative Banks (UCBs):
- Higher limits on unsecured loans
- Relaxation in housing loan tenor and moratorium rules
- Launch of “Saksham” training mission targeting over 1.4 lakh participants
For NBFCs:
Exemption from registration for small NBFCs without public funds or customer interface
Removal of prior approval requirement for opening more than 1,000 branches for certain NBFCs
RBI Monetary Policy February 2026: Financial Market Reforms
The RBI also announced:
- Finalization of External Commercial Borrowing (ECB) regulations
- Removal of the ₹2.5 lakh crore investment cap under the Voluntary Retention Route
- Regulatory framework for derivatives on corporate bond indices
- Greater flexibility for authorized dealer banks in forex transactions
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RBI Monetary Policy February 2026: Real Estate Industry Reaction
Commenting on the policy, Anuj Puri, Chairman of ANAROCK Group, said: “RBI’s decision to keep the repo rate at 5.25% means that home loan EMIs will not change either. This will keep buyers engaged but does nothing to lift demand further and does nothing to make housing more affordable.”
He added:
“The upside is that current house loan borrowers will not experience any EMI shocks for now, and new borrowers can plan their housing purchases with the benefit of predictability.”
On affordable housing, he said:
“Demand for affordable and mid-segment homes remains strong, but continues to be challenged by escalated pricing, which affects affordability.”
According to ANAROCK Research, affordable housing accounted for around 18% of total housing sales across cities in 2025, compared to 20% in 2024 and 38% in 2019.
Puri noted that Union Budget 2026-27 did not provide significant relief for affordable housing buyers, and called for tax breaks and interest stimulants for developers and buyers.
He also welcomed the REIT financing move:
“On a positive note, the move to allow banks to lend money directly to REITs within the rules makes it easier for REITs to raise capital, lowers expenses, and speeds up asset expansion in the office and retail segments.”
