Loans might get cheaper, RBI cuts rate: Know complete details here

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Everything you need to know RBI’s latest cut in the rates!


The Reserve Bank of India’s Monetary Policy Committee on Thursday lowered the key lending rate or repo rate by 25 basis points or 0.25 per cent to 5.75 per cent.  India’s Monetary Policy Committee is led by Governor Shantikanta Das.  Notably, the six-member committee also changed the policy stance to accommodative from neutral.

What is the repo rate?

Repo rate is the interest rate at which commercial banks borrow short –term funds from the RBI.  The decision has come after three- day meeting of the Monetary Policy Committee. Today’s cut is the third cut in a row to a level last seen in September 2010.  Today’s cut has come as a relief to borrowers are equated monthly instalments for home loans, car loans and other loans will come down to some extent. On the other hand, depositors would earn less on their bank investments.

This crucial move by the apex bank met economists’ estimates. As per a report by Reuters, 2/3 of 66 economists in a poll ahead of GDP data release had expected cut in Repo rate by 25 basis point. Notably, the rate has come after the official data last month showed Country’s GDP grew 5.8 per cent in the quarter ended March 31. It means that India lost its status as the fastest growing economy to China, which clocked a growth of 6.4 per cent in the three- month period.

Apart from it, The Reserve Bank of India has lowered its GDP target for the financial year 2019 -2020 to 7 per cent from 7.2 per cent.

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