The Reserve Bank of India (RBI) has cut its key lending rate otherwise known as the repo rate by 25 basis points. The repo rate now stands at 6.25%. This the lowest it has been in the last 6 years.
This cut could spell good news for home owners. Since the repo rate is the rate at which the central bank lends to other banks, it has an impact on home loan EMIs. If the repo rate comes down, home loan EMIs could come down as well. The transmission of the cut is dependent on the banks which have been quite reluctant to pass on the benefits to their consumers thus far. The RBI has repeatedly urged the bankers to do so.
The last rate cut came in April 2016 when the then Governor of RBI, Raghuram Rajan, cut the rate by 25 basis to 6.50%. The latest cut has come under the regime of the new Governor of the bank, Urjit Patel. But he did not unilaterally decide on the cut as was the case before. For the time ever, a six member panel called the Monetary Policy Committee took the decision to make the cut.
Kavitha Ravi for IndiaProperty.com
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