RBI cut CRR and repo rate, benefit from date mutual funds

New Delhi. The Reserve Bank of India (RBI) on June 6 cut the cash reserve ratio (CRR) by cutting 100 basis points and 50 basis points in the repo rate. Experts believe that these steps will prove to be very positive especially for Debt Mutual Funds. Due to the cut in CRR, the system can bring liquidity of about Rs 2.5 lakh crore in the system in the second half of FY 2025-26. This is expected to decline in bond yields and stability in the date market.

CRR i.e. the cash reserve ratio is the part that the banks keep from their deposits as cash with the Reserve Bank. When the CRR decreases, more money is available with banks to give loans or invest. At the same time, the repo rate is the rate on which RBI gives short term loans to banks.

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What are the fund managers saying?

Bandhan AMC fixed income chief Harshal Joshi said, “This aggressive policy of RBI will give clarity about the direction of the date market in the upcoming quarters. The yield curve can come down with the help of liquidity and low interest rates.” He also added that the market expected a repo cut in June and August, but the CRR deduction was a surprise. However, RBI’s liquidity support was already being felt. Sandeep Yadav of DSP Mutual Fund said, “CRR cuts will benefit the most short -term funds. Due to more liquidity, the inflow in these funds will increase. However, the repo cut does not have a direct impact on inflow.”

Experts believe that these incidents are now completely ‘price in’ in the market, so returns will not come directly from the RBI deduction. However, short duration funds are considered safe as there will be pressure in the yield to fall due to high demand. The Axis Mutual Fund report states that 10 -year government bond yield can be between 6% to 6.40% in the next 6 months, and the liquidity will benefit the most at short end.

Experts say that instead of taking time funds, keep it as a strategic part in the portfolio.

Recent trends

In April 2025, the record in date funds was inflated of ₹ 2.19 lakh crore, out of which ₹ 1.19 lakh crore went only in liquid funds. At the same time, there was a big withdrawal of ₹ 2.03 lakh crore in March.