Personal loan
The Reserve Bank of India (RBI) Monetary Policy Committee had reduced the repo rate from 0.25% to 6.25 percent in February, which was the first cut in about 5 years. According to Citibank’s new forecast, RBI is looking ready for another rate cut in its next policy meeting to be held from April 7 to 9 and can re -cut 25 basis points i.e. 0.25%.
Repo rate may decrease by 1% this year
Bank of America’s global research also hopes that the repo rate will reach 5.5 percent by the end of the year, as the RBI has scope to cut rates in view of non-curiosity development and controlled price pressures. This means that the banking regulator will cut a total of 100 basis marks i.e. 1 per cent in 2025, including the 0.25% rate cut in February. If this happens, the EMI of home loan and car loan will decrease. Also, interest rates on personal loans will also decrease.
What is a repo rate?
Simply put, the repo rate or repair rate is the rate on which RBI lends commercial banks for a short term in exchange for government securities. Currently the repo rate is 6.25 percent.
How do customers get benefit?
Banks have to bear the cost of capital, including the repo rate. The higher the repo rate, the higher the cost of capital. And the lower the repo rate, the lower the cost of capital. When banks are able to raise funds at low cost, they can lend at low cost. This is the reason why banks provide the benefit of rate cut to customers.
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