The Reserve Bank of India (RBI) Governor Raghuram Rajan is "running out of time" to reduce key lending rates further, says a global brokerage firm.

"Time is running out for further lending rate cuts this fiscal with the April-October busy industrial season barely two months away," Bank of America Merrill Lynch (BofA ML) said in a report to

The brokerage estimates the credit growth to have fallen to 10 percent from 21 percent due to "tight reserve money." "With capital flows drying up, it is difficult for the RBI to pump in sufficient reserve money to soften lending rates before the busy season begins in October," the firm said.

A drop in inflation and an improvement in industrial production will likely lead to a rate cut by the RBI in September, it added.

Rajan had kept the repo rate unchanged at 7.25 percent at a meeting on August 4. The central bank has also kept cash reserve rate (CRR) unchanged at 4 percent. Rajan had reprimanded banks for not fully passing the benefits of the previous three rate cuts to the consumers.

The RBI had cut repo rate by 25bps to 7.25 percent at its June meeting, its third cut this year.

The unexpected sharp rise in the country's inflation rate to 5.4 percent in June is estimated to ease in the coming months, as lower crude oil prices will result in lower food prices.

However, a significant risk for the RBI rate cuts is the growing expectations on interest rate hike by the US central bank in September.