RELIEF FOR LOAN HOLDERS AS RBI DECIDES NOT TO HIKE REPO RATE FOR NINTH CONSECUTIVE TIME

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Yugen Realty, New Delhi.

The Reserve Bank of India (RBI) has decided for the ninth consecutive time not to increase the repo rate, providing relief to loan holders. The central bank has once again kept the interest rate steady at 6.5%, considering the rising inflation in the country.

During its August financial review, the RBI decided to maintain the repo rate at its previous level of 6.5%. Notably, this marks the ninth consecutive time the Monetary Policy Committee (MPC) has opted to keep the repo rate unchanged, with the last change occurring in February 2023.

This is only the second time in the past 25 years that the central bank has refrained from altering the repo rate for such an extended period.

The Monetary Policy Committee meeting took place from August 6 to 8, with the six-member committee deciding on the final day, by a majority of 4-2, to keep the repo rate unchanged.

The central bank also indicated that it would maintain a dovish stance regarding monetary policy. This decision is likely to disappoint those who were hoping for cheaper loans and reduced EMI burdens.

The last adjustment to the repo rate by the Reserve Bank’s Monetary Policy Committee was in February of the previous year, meaning there has been no change in policy interest rates for the past year and a half. During the February 2023 MPC meeting, the RBI raised the repo rate to 6.5%.

With the RBI maintaining the interest rates, there is little expectation for an increase in bank FD interest rates. Additionally, there will be no increase in the EMIs for home loan holders.

The repo rate mainly affects RLLR-linked loans, so any changes in the repo rate impact the EMIs of borrowers with such loans. However, home loans taken under the MCLR are not linked to the repo rate.

Banks determine interest rates for MCLR-based loans according to RBI guidelines. In many cases, the interest rates for repo-linked loans are higher than those for MCLR, so it’s advisable to compare and understand the basis of your loan interest rate when taking a loan.

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Disclaimer : This information has been collected through secondary research and Yugen Realty Newspaper is not responsible for any errors in the same.

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