The Reserve Bank of India today reduced the repo rate — the interest rate at which it lends money to banks — by a marginal 25 basis points. The new repo rate now stands at 6.25 from the earlier 6.50.
The implication of the RBI reducing the repo rate is that your EMIs are likely to become cheaper (only if you got your loan on a floating interest rate).
Here are the the highlights of the decisions taken by the Reserve Bank of India’s Monetary Policy Committee:
- RBI cuts key lending rate (repo) by 0.25 pc to 6.25 pc
- Reverse repo rate cut to 6 pc, bank rate to 6.5 pc, CRR unchanged at 4 pc
- Headline inflation estimates revised down to 2.8 pc in March quarter, 3.2-3.4 pc in first half of next fiscal and 3.9 pc in Q3 of FY’20
- Projects GDP growth to accelerate to 7.4 pc next fiscal, from 7.2 pc in 2018-19
- Pegs April-September growth in range of 7.2-7.4 pc, and 7.5 pc in Q3 of 2019-20
- Oil price outlook hazy, trade tensions to weigh on global growth prospects
- Union budget proposals to boost demand by raising disposable incomes
- To revise definition of bulk deposits as single rupee deposits of Rs 2 crore and above from Rs 1 crore currently
- To issue guidelines to harmonise major categories of NBFCs
- Proposes to set up a task force on Offshore Rupee Markets to ensure Rupee value stability
- Removes restrictions on Foreign Portfolio Investors investing in corporate debt market
- To come out with discussion paper on Payment Gateway Service Providers and Payment Aggregators
- Hikes limit of collateral-free agricultural loans to Rs 1.6 lakh from Rs 1 lakh, to help small and marginal farmers
- Constitutes Working Group to review agricultural credit
- Monetary policy committee votes 4:2 in favour of rate cut, unanimous on change in stance
- 2 MPC members Chetan Ghate and Viral Acharya were for status quo in rates
- Next meeting of the MPC from April 2-4.