RBI’s Repo Rate Cut:
RBI has cut the repo rate by 0.25%. It has decreased from 6.25% to 6%. After the meeting of the Monetary Policy Committee (MPC) meeting, interest rates were announced on Thursday. 4 out of 6 MPCs supported the rate reduction. Even in the February review meeting, the RBI had reduced the repo rate by 0.25%, after which the repo rate was 6.25%.
- Repo rate decreased from 6.25% to 6%, RBI gives loans to banks on the basis of repo rate.
- Banks will get cheaper loans, it will be easy for them to pay a low-interest rate.
- According to the Expert, the drop in repo rate can reduce the rate of impact on deposits, but if the bank wants to cut it, we will welcome the decision.
Impact of Repo Rate Cut
Loan EMIs will be lower:
The repo rate is the rate at which the RBI lends to the banks. Due to this, banks get Cheaper Loans. It also clears the way for customers to lower the rates of loans. However, last time banks did not reduce the interest rates as much as the RBI had reduced the repo rate.
GDP growth to be 7.2% in current fiscal:
RBI has expressed that GDP growth in the current financial year (2019-20) will be 7.2%. Retail inflation in the first half (April-September) is expected to be between 2.9 to 3%. Last time RBI had released an estimate of 3.2-3.4%. In the second half (October-March), retail inflation could be 3.5-3.8%. While fixing the interest rates, RBI keeps retail inflation in mind.
Neutral outlook:
Even after the reduction in the repo rate last time, bankers also expressed the hope that the repo rate can be reduced in the April policy as retail inflation is consistently lower than the target (4%) of the RBI. MPC has changed the outlook to neutral from the last time. This time, the same outlook has maintained.
Lower interest rates on loans will depend on the banks:
Reducing the rate by RBI, banks will not immediately and fully benefit the customers. Despite lowering the repo rate of 0.25% last time, the major banks had reduced the rates of loans from 0.05 to 0.10%. On this issue, the RBI governor had also held meetings with the banks last week. SBI, however, has added interest rates to the Repo Rate. This decision will come into effect from 1st May.
New circular for NPA solution rules will be released soon: RBI governor
The Supreme Court had canceled the circular of RBI on February 12, 2018. According to him, defaulting on one day was a matter of putting any company’s debt in NPA. Under this, the bank has to apply for bankruptcy proceedings against the company under the IBC Code within 15 days of the deadline of 180 days. RBI governor Das has said that the new Circular of NPA solution rules will be released soon.
