The finance chiefs of India Inc hailed the move of Reserve Bank of India (

’s) 50 basis points repo rate cut as positive, saying that it sends a strong pro-growth signal to organisations. Repo rate is the interest at which the RBI lends money to the commercial banks.

The Chief Financial Officers (CFOs) said the decision is set to boost consumption across sectors, which in turn boost demand that gives confidence to faster decision making in deploying funds for capital expenditure. CFOs also stated that the rate cut move isn’t just good for private sector players — it benefits consumers, industry, and the broader economy. It’s a welcome decision and shows RBI’s intent to stimulate growth, they said.

The RBI cut the repo rate by 50 basis points to 5.5% on Thursday on the back of tamed inflation, now projected at 3.7% for FY26. This marks the third consecutive rate cut under Governor Sanjay Malhotra, following earlier reductions in February and April of 25 bps each that signalled a clear easing stance. In a parallel move, the RBI will also reduce the Cash Reserve Ratio (CRR) by 100 basis points, from 4% to 3%, in four tranches, effective from September 2025.

“The RBI’s 50 bps rate cut came as a surprise — I expected it in two phases. But given the global tensions and weak demand, it was well timed and much needed. It will help spur consumption and support growth across sectors, especially real estate,” said Rajan Luthra, CFO, Action Construction Equipment (ACE) Ltd.

CFOs pointed out that cheaper credit and easier liquidity should lift private-sector confidence to invest in capacity, R&D and job creation.

“With this cut, companies — including ours — will be encouraged to invest more in private capex. It could unlock more financing and spur activity. The message from the RBI is strong. Since they’ve acted decisively, companies may not wait for further cuts — they’ll likely begin investing now,” said Luthra.

Net positive for investment cycleThe finance chiefs agreed that the interest rate decision by the RBI certainly provides a big impetus for borrowing and investment, however that’s not the only metric that they look at.

“Overall, it’s a net positive for industry and India Inc. Lower interest costs mean lower cost of capital — a big impetus for investment. However, private capex also depends on broader factors like demand conditions, export outlook, and tariffs” said Nikhil Sohoni, CFO, Blue Star.

Sohoni added that investment decisions are based on long-term growth needs. And while interest rates matter, decisions are also driven by cash flow and strategic priorities.

Quick transmission by banks remains keyAshish Jain, CFO, of KRBL said that lower rates improve project internal return rates (IRRs) and shorten payback periods, so they are invariably helpful. But he agreed with Sohoni that capex is ultimately driven by demand visibility and strategic fit, not by financing terms alone. Transmission will also be staggered as banks re-price liabilities, he said.

CFOs said the real question now is how quickly banks pass this on to borrowers. That will determine how effective it is for India Inc.

"We are still waiting to see if large banks actually pass on the full benefits of this and previous rate cuts. Many haven’t done that over the past 6–9 months. A more proportionate pass-through would help the sector more meaningfully," said Manik Malik, CFO, BPTP.

Real estate sector investments gain confidenceThe real estate sector is sitting on strong balance sheets, good internal generations with lower debt levels. This means that interest rate impact on borrowing may be only minimal. However, the CFOs said this does improve the confidence of their investment cycle into new projects.

"From our point of view, confidence improves as sales numbers pick up. That’s what spurs more investment — both from us and mature developers. If customers come back, so does capital expenditure. It’s not that developers are waiting to borrow more just because rates fell. But with stronger sales numbers and better liquidity, the willingness to invest increases significantly," said Malik.

From a developer's perspective, lower interest rates and improved liquidity allows developers for quicker project execution and relief on working capital pressures, said Nitin Bavisi, CFO, Ajmera Realty & Infra India. “Not only does this enhance balance sheet quality but also translates into a virtuous cycle of growth both for demand and supply — win-win for the overall ecosystem,” Bavisi said.