Cheap Loans Possible As RBI Cuts Rate To Lowest In 9 Years

The Reserve Bank of India’s Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, on Thursday unanimously lowered key lending rate or repo rate by 25 basis points or 0.25 per cent to 5.75 per cent, reports NDTV.

The six-member committee also changed the policy stance from “neutral” to “accommodative”. Repo rate is the interest rate at which commercial banks borrow short-term funds from the RBI. Thursday’s decision comes after conclusion of a three-day meeting of the MPC. With this cut, the RBI lowered the key interest for third time in a row to a level last seen in September 2010.

A recent poll by Reuters showed two-thirds of 66 economists expected the Monetary Policy Committee to announce a 25-basis-points cut in the repo rate to 5.75 per cent.

The rate cut comes as a relief to borrowers as equated monthly instalments (EMI) for home loans, car loans and other loans are set to come down. However, depositors would earn less on their bank investments.