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Home, auto loans to cost less after RBI rate cut
In a pre-Diwali festival bonanza to home, auto and corporate loans borrowers, new RBI Governor Urjit Patel in his maiden policy review on Tuesday surprised the markets by announcing 0.25 per cent rate cut, lowering key repo rate to a 6-year low of 6.25 per cent. The move will lead to a significant fall in interest rates on home, auto and corporate loans.
New Delhi: In a pre-Diwali festival bonanza to home, auto and corporate loans borrowers, new RBI Governor Urjit Patel in his maiden policy review on Tuesday surprised the markets by announcing 0.25 per cent rate cut, lowering key repo rate to a 6-year low of 6.25 per cent. The move will lead to a significant fall in interest rates on home, auto and corporate loans.
Bankers on their part promised to act swiftly to ensure monetary policy transmission, a move that will benefit existing and prospective borrowers. Finance Ministry said the rate cut will help in achieving 8 per cent economic growth.
"For the busy season of the financial year, a cut in repo rate by 25 basis points is indeed a welcome sign. With MCLR (Marginal Cost of Funds based Lending Rate) already stabilised, the pass through of this cut is expected to be quite swift," said Dena Bank CMD Ashwani Kumar who is also chairman of Indian Banks' Association.
SBI Chairperson Arundhati Bhattacharya said: "With benign inflation trajectory going forward, RBI’s policy stance is expected to remain accommodative. Banks will continue to transmit rates based on evolving liquidity scenario."
In independent India's first collective interest rate setting decision, the 6-member Monetary Policy Committee (MPC), which has three members nominated by the government and the rest from the Reserve Bank of India, lowered repo rate to 6.25 per cent from 6.50 per cent.
The reverse repo rate stands at 5.75 per cent and Marginal Standing Facility rate at 6.75 per cent. The rate cut along with reduction in small savings rates by the government will encourage banks to pass on the benefit to the borrowers, RBI Governor Urjit Patel said.
