The move is expected to boost sectors such as real estate, which depends heavily on loans for its consumers to make a purchase.

The Reserve Bank of India's Monetary Policy Committee (MPC) has decided to cut the policy repo rate by 25 basis points, from 6.5 percent to 6.25 percent. India's largest lender State Bank of India will see a decline in its lending rates linked to an external benchmark (EBLR) this month itself, said Chairman CS Shetty.

RBIs 25-bps rate cut, its first in five years, pressures private banks' NIMs while public banks remain stable. NBFCs may see funding relief, but liquidity challenges persist. Analysts predict a shallow rate-cut cycle with regulatory shifts benefiting financial institutions.