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RBI’s Monetary Policy (June 05, 2026): In a Nutshell

The bi-monthly monetary policy of the Reserve Bank of India (RBI) was announced on June 05, 2026. Here are some of the highlights of the monetary policy announcement.

Rates

 

 Change Rate
Policy repo rate Unchanged 5.25%
Standing deposit facility (SDF) rate 5.00%
Marginal standing facility (MSF) rate 5.50%
Bank rate 5.50%

Monetary policy stance

  • Monetary policy stance unchanged as ‘neutral’.

Economic conditions 

  • The Second Advance Estimates released by the National Statistical Office (NSO) placed India’s real Gross Domestic Product (GDP) growth at 7.6% in 2025-26, owing to strong expansion in private consumption and fixed investment. Robust performance of manufacturing and services sectors were the growth drivers from the supply side.
  • Real GDP growth for 2026-27 is projected at 6.6%. 
  • Prolonged global supply chain disruptions, volatility in global financial markets, and weather-related shocks continue to pose downside risks to the domestic growth outlook.
  • For 2026-27, Consumer Price Index (CPI) inflation is projected at 5.1% and core inflation (i.e. CPI excluding food & beverages and fuel) is projected at 4.7%. 
  • The inflation forecasts are subject to upside risks due to global supply chain disruptions, global commodity price shocks, uncertainty about the spatial and temporal distribution of the south-west monsoon and El Niño conditions.
  • As on May 29, 2026, India’s foreign exchange reserves stood at US$ 682.3 billion, adequate in terms of the standard metrics of reserve adequacy including import cover (about 11 months) and external debt (89.1%).

Other measures

To attract foreign capital, the RBI has taken the following measures –

  • Under the Fully Accessible Route (FAR), all new issuances of government securities of 15-, 30- and 40-year tenor will be included in ‘specified securities’. In addition, limits pertaining to short-term investment, concentration and individual securities on investments under the General Route by Foreign Portfolio Investors (FPI) are being removed. These measures, along with the tax benefits provided by the government, are expected to attract foreign capital for government borrowing.
  • The limits for investment by Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments traded on the stock market without Securities and Exchange Board of India (SEBI) registration are being increased. Further, the same facility is being extended to all individual Persons Resident Outside India (PROIs) at par with NRIs and OCIs.
  • A facility of concessional forex swap will be provided till September 30, 2026 to incentivize External Commercial Borrowings (ECBs) by Public Sector Undertakings (PSUs).
  • A similar facility for bearing the full hedging cost will be provided till September 30, 2026 to Authorised Dealer (AD) banks for raising fresh 3–5-year Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.
  • The time for realisation of export proceeds will be restored to 9 months.


References

Reserve Bank of India. (2026, June 05). 'Governor’s Statement: June 05, 2026'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=62864


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