RBI hikes repo rate by 25 bps; house, auto loans to get costlier
Mumbai, June 6: Housing loan and auto loan will become dearer with the Reserve Bank of India (RBI) on Wednesday raising its key interest rate for the first time since January 2015.
The country's central bank -- RBI -- has raised repo rate by 25 basis points (bps) to 6.25 per cent, responding to concerns on inflation from surging global crude oil prices.
The RBI, however, maintained its 'neutral' stance on policy, as it has done over four previous bi-monthly policy reviews when it held the repo, or its short term lending rate for commercial banks, at 6 per cent. This stance allows the RBI to move either way on rates.
"The decision of the Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent," the RBI statement said.
"Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent."
Addressing the media following the policy announcement, RBI Governor Urjit Patel elaborated that the neutral stance allowed various options to the central bank and was not in contradiction to raising rates.
"The neutral stance leaves all options open... other central banks do the same, there is no contradiction here," he said in response to a query.
"We have kept the neutral stance as well as responded to the risks to inflation visible in recent months. Inflation has remained over the target level of 4 per cent for over six months," he added.
The six-member MPC voted unanimously for the rate hike that the central bank was undertaking after more than four years and comes for the first time under the Prime Minister Narendra Modi-led government.
The government was quick to laud the latest monetary policy review.
"Welcome monetary policy statement. Quite balanced assessment of growth, inflation and external situation and expectations. Rate hike understandable considering existing interest differentials and oil price movement. Should help in removing uncertainties and steadying markets," Economic Affairs Secretary S.C. Garg said in a tweet.
The RBI also revised upwards the retail inflation range to 4.8-4.9 per cent in the first half of 2018-19, and to 4.7 per cent in the second half, including the impact of house rent allowance (HRA) for central employees, and with risks on the upside.
"The April-May prints show that inflation, excluding food and fuel has hardened. Higher oil prices and input costs have added to the upside risks," RBI Deputy Governor Viral Acharya said.
"On the other hand, growth indicators show that economic revival is on sound footing. Given the inflation target of 4 per cent, it seemed the right time for the MPC to consider a hike of 25 basis points," he added.
The country's retail inflation rose to 4.58 per cent in April from a rise of 4.28 per cent in March and 2.99 per cent in the corresponding period of the previous year.
The fourth quarter estimate of Gross Domestic Product (GDP) released by the Central Statistics Office last month estimated the growth rate at 7.7 per cent, as against 5.6 per cent, 6.3 per cent and 7 per cent respectively in the first three quarters.
Recent crude oil price volatility imparts considerable uncertainty to the inflation outlook, the RBI said.
"Since the MPC meeting in early April, the price of the Indian basket of crude surged from $66 a barrel to $74. This, along with an increase in other global commodity prices and recent global financial market developments, has resulted in a firming up of input cost pressures," the statement said.
To arrive at this decision, the MPC extended its deliberations this time by an extra day.
Commenting on the development, Deloitte India Partner Anis Chakravarty said in a statement: "The RBI was cautious on the factors that could change the course of the underlying optimism, major among them being the projections on oil price movement and rising geopolitical tensions.
"However, given that the committee has maintained a neutral stance, there remains room for manoeuvrability in policy perspective should incoming data show sharp fluctuations."
Arihant Capital Markets Director Anita Gandhi said: "Recent hike in crude prices and better GDP for last quarter of FY 18 suggest inflation trajectory may be on the higher side. Though this may put some pressure on borrowers, it is positive news for the savers in the economy."
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Allahabad HC orders FIR against Rahul Gandhi in dual citizenship case
Lucknow (PTI): The Lucknow bench of the Allahabad High Court on Friday ordered an FIR be filed against Congress MP Rahul Gandhi in connection with an alleged dual citizenship controversy.
The bench permitted the state government to hand over the probe to any central probe agency after registration of the FIR.
The order was passed by a bench of Justice Subhash Vidyarthi on a petition filed by S Vignesh Shishir, who had challenged a January 28 order of a special MP/MLA court rejecting his plea for an FIR against Gandhi, the leader of the Opposition in the Lok Sabha.
The special court had earlier held that it was not competent to adjudicate on issues related to citizenship.
The petitioner, a BJP worker from Karnataka, had sought registration of an FIR and a detailed probe into the matter, levelling allegations against Gandhi under provisions of the Bharatiya Nyaya Sanhita (BNS), the Official Secrets Act, the Foreigners Act and the Passport Act.
The complaint was initially filed before the special MP/MLA court in Rae Bareli. However, on the petitioner's request, the high court transferred the case to Lucknow on December 17, 2025.
The MP/MLA court in Lucknow subsequently dismissed the plea on January 28, 2026, prompting the petitioner to approach the high court, which has now ordered registration of an FIR.
In its order, the bench said that from a bare perusal of the allegations, prima facie cognizable offences were made out against Gandhi and hence the allegations required to be investigated.
The bench said that the special court should have looked into whether the allegations prima facie made out any cognizable offences or not, but it failed to consider it.
Earlier, Deputy Solicitor General of India SB Pandey produced the central government's records in the court relating to the citizenship controversy surrounding Gandhi.
Government counsel VK Singh also consented on behalf of the UP government that the allegations prima facie made out cognizable offences.
After having a detailed hearing, the bench found that the material on records showed that Gandhi had committed "cognizable offences" in having dual citizenship, and these allegations required to be probed.
The petitioner has alleged that Rahul is a UK Citizen and incorporated a company named M/S Backops Ltd in August 2003.
It was further submitted that Gandhi categorically admitted and voluntarily declared his nationality as British, having a Director Identification ID and London and Hampshire addresses.
In his petition, Shishir claimed that Rahul submitted the company's annual returns in October 2005 and October 2006, listing his nationality as British.
Thereafter, the company was dissolved through a dissolution application in February 2009.
According to the petitioner, the material placed before the court includes records suggesting that Rahul Gandhi may have been listed as a voter in the United Kingdom and participated in electoral processes there.
During the course of the hearing, the high court earlier directed the Ministry of Home Affairs to place all relevant records, including classified documents, before the court.
