RBI Repo Rate Cut: The Reserve Bank of India has made a key decision. It has cut the repo rate, which affects the country's economy, by 25 basis points. Let's find out what will happen with this RBI decision.
The RBI has cut the repo rate again, bringing it to 5.25% after a 25 basis point reduction. This year's total cut is 1.25%. Let's see how this affects consumers and loan holders.
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What is the Repo Rate?
The repo rate is the interest banks pay to borrow from the RBI. Simply put: *RBI is the main bank for all banks. *Bank = Customer. *Repo Rate = Interest on RBI's loan.
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Why is the repo rate cut important?
When the economy slows, a rate cut reduces borrowing costs for banks, lowers interest on loans, boosts loan demand, increases industrial investment, and speeds up job creation.
What are the benefits of the repo rate dropping to 5.25%?
Home loans will get cheaper. Since home loans are long-term, rate changes have a bigger impact. If the repo rate decreases: * EMI goes down * Loan tenure shortens * Overall interest burden is reduced.
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How much will the EMI on a ₹10 lakh loan decrease?
On a Rs 10 lakh loan for 15 years, a 0.25% rate cut (9% to 8.75%) saves Rs 150-Rs 250/month. If banks pass on a 0.75% cut (9% to 8.25%), you could save Rs 500-Rs 650/month.
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Which loans benefit the most?
Home loans benefit most, especially floating-rate ones. Fixed-rate personal loans aren't affected, but new loans will be cheaper. MSME loans on floating rates also see benefits.
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It's not just EMIs... it also affects FDs and RDs
A repo rate cut doesn't just lower EMIs; it can also reduce interest on FDs and RDs. It's a good time to take out cheaper home loans. Your key benefit is lower EMIs and interest.
