RBI Repo Rate: The Reserve Bank has cut rates. After this, the EMI of your home loan and all other types of loans will decrease. Banks have linked the loan to the repo rate, hence the EMI of the loan will decrease as the repo rate decreases.
New Delhi: Reserve Bank has cut the repo rate for the fifth time in a row. The Reserve Bank has reduced the repo rate by 0.25 per cent to 5.15 per cent. The Reserve Bank has kept its stance uncommitted. This means the bank can further reduce rates if needed.
The 5 members of the Monetary Policy Committee voted to reduce the 0.25 per cent rate. At the same time, one member has voted in favor of a cut of 0.4 per cent. Now the reverse repo rate will be 4.9 percent. The bank rate will be 5.4 percent.
The stock market declined after the Reserve Bank of India cut rates. The Sensex was trading at 13 points and the Nifty fell by 16 points. The market fluctuated during the policy.
Reserve Bank Governor Shaktikanta Das said that liquidity remained adequate in August and September. If the monsoon is normal then the growth rate in FY 2021 could be 7.1 per cent. He said that the growth rate fell due to reduced demand in the first quarter. The rabi season is looking good. The Reserve Bank Governor said that the Indian banking system is strong. People should not pay heed to rumors.
On the issue of PMC Bank, it said that the Reserve Bank has taken several steps in this regard. He said that such an opinion should not be formed about all banks due to this happening in one bank. The governor said that the government did not demand an interim dividend of Rs 30,000 crore from the Reserve Bank.
The Reserve Bank has lowered the growth target to 6.1 per cent for FY 2020 from 6.9 per cent. The inflation target is 3.5 to 3.7 percent. Earlier, the Reserve Bank had cut the repo rate by 0.25 per cent in February, April and June. There was a cut of 0.35 percent in August, while today there was a cut of 0.25 percent.
After this deduction, loans to many banks including SBI, PNB, Bank of India, Allahabad Bank have become 0.25% cheaper. These banks have already linked their loans to the repo rate. Due to the decrease in the repo rate, their loan also became cheaper.
So far this year, the Reserve Bank has cut the repo rate by 1.10%. After this deduction, in 2019 the total will be 1.35 percent. In August, RBI cut it by 0.35 per cent to 5.4 per cent. A 3-day meeting of 6 members of the Monetary Policy Committee began on 1 October 2019. October 2 was the Gandhi Jayanti holiday.
In the first quarter of the current financial year, the growth rate has come down to 5 percent. This is a 6-year low. RBI has already ordered banks to link loans to repo rates from 1 October.