New Delhi, Dec 5 (NationPress) The Reserve Bank of India (RBI) has made a strategic move by reducing the repo rate by 25 basis points to 5.25 percent, a decision that industry chambers have termed as critical for fostering confidence, reducing borrowing expenses, and enhancing growth and exports. On Friday, industry associations expressed their approval of this timely intervention.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) applauded this proactive approach, emphasizing that it occurs at a pivotal moment when the Indian economy demonstrates a balanced strength characterized by solid GDP growth and controlled inflation.

Similarly, the Federation of Indian Export Organisations (FIEO) endorsed the RBI's action, noting that it would bolster export competitiveness and alleviate liquidity challenges faced by exporters.

Nirmal Minda, President of ASSOCHAM, remarked, "This rate cut, following a total of 125 bps reductions this year, will lower borrowing costs, encourage industrial growth, and generate substantial job opportunities across various sectors."

The reduction in the repo rate will enable banks to decrease borrowing costs, allowing them to provide loans at more affordable rates to both retail and corporate clients.

Moreover, this enhanced accessibility to financing will fortify Non-Banking Financial Companies (NBFCs) and housing finance firms, thus promoting financial inclusion and broadening credit access for traditionally underserved groups.

Developers will benefit from less expensive project financing, while homebuyers can anticipate reduced EMIs, which could catalyze new project launches and help clear unsold inventory.

Additionally, lower auto loan rates are expected to spur demand for vehicles, particularly in rural regions. The ongoing festive season may also witness increased purchases of consumer goods such as electronics and appliances.

ASSOCHAM projects that MSMEs will gain from the availability of affordable credit for both expansion and working capital needs, particularly as recent GST cuts further diminish operational expenses.

FIEO President S.C. Ralhan noted that the reduction of borrowing costs comes at a crucial time when Indian exporters are dealing with unpredictable global demand and fluctuating input costs.

“The RBI's decision will significantly reduce credit expenses for exporters, empowering them to invest more readily in working capital, technology advancements, and international marketing strategies,” Ralhan stated.

He urged banks to swiftly pass on the benefits of the rate cuts to exporters through lower lending rates and expedited credit disbursement to maximize the effects of this monetary easing.