Interest rates influence corporate financial performance through borrowing costs, investment decisions, consumer demand, cash-flow management, asset valuation and access to credit. This paper examines these channels in the context of Indian non-financial companies, with particular attention to the Reserve Bank of India (RBI) policy-rate cycle from the COVID-19 period through 2025. The study uses secondary data from RBI publications and findings from recent empirical literature on Indian firms. The evidence shows that monetary tightening can increase interest expense, reduce debt-servicing capacity and postpone investment, while monetary easing can reduce financing costs and support investment and demand. However, the effect is heterogeneous: firms with high leverage and greater dependence on floating-rate debt are more exposed than firms with strong internal cash generation or fixed-rate funding. Recent Indian evidence based on thousands of non-financial firms confirms that price- and quantity-based monetary policy significantly affects corporate investment and that firm-specific characteristics condition the strength of transmission. The paper concludes that interest-rate changes should be assessed together with leverage, debt maturity, interest coverage, liquidity and sectoral demand rather than treated as a single determinant of profitability.

Shraddha Dubey, "The Impact of Interest Rate Changes on The Financial Performance of Indian Companies" International Journal of Scientific Research and Engineering Development, V9(5): Page(761-766) September - October 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.