Mr. Sanjay Chaturvedi, Chief Treasury Officer, Namdev
Finvest Limited
Compared with its June policy, the RBI today kept the
repo rate unchanged at 5.25% and retained its neutral stance, but marginally
improved the FY27 macroeconomic outlook. Real GDP growth is now projected at
6.7%, against 6.6% previously, while inflation is estimated at 5.0%, slightly
lower than the earlier 5.1% forecast. The revisions suggest confidence that
domestic demand and financial conditions can absorb external pressures without
requiring an immediate policy response. India’s economy remains resilient
despite geopolitical tensions, volatile energy prices, supply-chain disruptions
and El Niño-related uncertainty. Strong private consumption, continuing
investment momentum and robust services activity support the growth outlook,
although higher input and logistics costs may weigh on selected sectors.
Healthy banking-system liquidity and sustained credit demand should aid transmission,
while potential FCNR(B) inflows could strengthen foreign-currency funding and
ease pressure on market liquidity. The unchanged rate also gives borrowers and
businesses greater near-term certainty. However, the RBI is likely to remain
vigilant as crude prices, currency movements, food inflation and global
monetary tightening could alter the balance of risks.
Overall, the outcome is more optimistic than the previous
policy outlook but still cautious: growth expectations have strengthened,
inflation concerns have eased modestly, and the central bank has preserved
flexibility to respond if conditions change. We, at Namdev Finvest Limited,
still maintain a conservative stance amid the hazy outlook due to the dual
risks of the West Asia conflict and the effects of El Niño on the Indian
economy at large.
For the MSME sector, the past two years have been
characterised by regulatory tightening and higher risk-weight requirements,
which have strengthened underwriting standards and improved credit discipline
across the industry. Asset quality has improved, leverage levels have moderated
and credit demand remains healthy. We believe the sector has largely worked
through the peak of the stress cycle and is entering a more sustainable growth
phase, with better credit quality, lower over-leverage and stronger borrower
resilience. MSME credit outstanding grew 16% year-on-year to ₹67.6 lakh crore,
while GNPAs improved by around a percent over the past year. In this
environment, NBFCs with deep rural and semi-urban presence and strong risk
assessment capabilities will be best positioned to support underserved MSMEs
and microfinance borrowers while maintaining prudent growth. We expect these
markets to remain key drivers of credit demand, supported by improving asset
quality, funding availability and stronger borrower fundamentals.
The stable policy environment also provides greater visibility on funding costs and interest rate expectations, enabling NBFCs to undertake more effective balance sheet planning and prudent liquidity management. Going forward, while global uncertainties will continue to be monitored closely, the current policy stance provides the confidence and stability needed to support responsible credit expansion and sustain India's long-term growth momentum.