Mumbai, Feb 8: The Reserve Bank of India (RBI) has announced a much-awaited repo rate cut for the past five years. The short-term lending rate of banks has been reduced by 0.25 percent to 6.25 percent. Its results were released yesterday.
What is the expectation of RBI rate cut India
This means that banks are likely to reduce interest rates on home, auto and personal loans slightly.At the same time, interest rates on deposits may also decrease.
The Monetary Policy Committee (MPC) headed by the new Governor of the Reserve Bank of India (RBI), Sanjay Malhotra, held a three-day meeting.
The main points among them are as follows
- To boost economic growth, the repo rate has been cut by a quarter percentage point from 6.50 percent to 6.25 percent, This is the first interest rate cut in five years since May 2020,
- The reverse repo, the interest rate offered by the RBI on the amount maintained by banks, will remain at 3.35 percent,
- The cash reserve ratio (CRR) of banks will remain at 4 percent,
- The country’s growth is estimated to be 6.70 percent in the next financial year starting in April,
- The country’s economic growth is estimated to be 6.40 percent in the current financial year,
- Inflation in the next financial year, if there are no major shocks, will be 4.20 percent.
- Geopolitics, trade policy, and financial market volatility are the main issues.
New domain for banks
With a view to further ensuring security in financial transactions, the Reserve Bank of India is going to introduce two domains, namely ‘Bank.in’ and ‘PIN.in’. Accordingly, all banks will have to establish websites that can be accessed as ‘Bank.in’ and ‘Financial Institutions.in’.
The Reserve Bank has said that the ‘Bank.in’ domain will be available only to banks; it will help customers easily identify them and avail services securely. ITR Pvt. Ltd., a banking technology development and research institute, has been authorized by the RBI to register these domains by banks from April.
Currency policy will not change
The Reserve Bank of India (RBI) has said that there is no target, specific level or limit for the value of the rupee, as the value of the Indian rupee continues to fall against the US dollar.
Stating that the country’s currency policy has remained unchanged for many years, RBI Governor Sanjay Malhotra said that it is customary to intervene only when there is excessive fluctuation in the value of the rupee.
The markets determine the value of the country’s currency; the RBI will monitor it and take appropriate action only if necessary, he said.
Warning to Banks
The Reserve Bank will take strict action if banks sell investment schemes without providing complete information to the customer.The RBI will take note of complaints that some people are indulging in such activities due to pressure to meet sales targets.
Sanjay Malhotra Governor, [Reserve Bank]
How much will home loans reduce
Since the repo rate has been reduced by a quarter percent, we can expect banks to pass on the benefit to borrowers.
Accordingly, let’s see how much will be saved if the interest rate on a home loan is reduced by a quarter percent.
Interest rate changes for home loans
- The current interest rate on a 30-year loan of Rs. 50 lakh will be reduced to 8.50% from 8.75%.
- The current interest rate on a 30-year loan of Rs. 50 lakh will be reduced to 9.30% from 9.55%.
If the interest rate is reduced from 9 percent to 8.75 percent, the interest rate on a 30-year loan will reduce by Rs 4.40 lakh or 10 months.
Savings account interest rate
- Current interest 9.0% Interest amount Rs.57,96,711 Interest savings Rs.0 Total period 240 Installment savings 0 months.
- Current interest 8.75% Interest amount Rs. 53,60,243 Interest savings Rs. 4,36,467 Total term 230 Installments per month 10
- Current interest 8.50% Interest amount Rs. 49,77,144 Interest savings Rs. 8,19,567 Total term 222 Installments per month 18
Similarly, if the interest rate is reduced from 8.50 percent to 8.25 percent,
The interest rate will reduce by Rs 8.20 lakhs or 18 months.
Indian economic growth
Year 2021 to 2022 9.70 Year 2022 to 2023 7.00 Year 2023 to 2024 8.20 Year 2024 to 2025 6.40 Year 2025 to2026 6.70
(Growth percentage)
Quarterly growth forecast
Year 2025-26 Apr. Jun.-6.70 Jul.-Sep.,7.00 Oct.,-Dec., 6.50 Jan.,-Mar.- 6.50 Average- 6.70 (in growth percentage)
Quarterly inflation forecast
Current year till 2025-26. Jan.-Mar. 24-25 Inflation 4.40% Apr.-Jun.-Inflation 4.50% Jul.-Sep., Inflation 4.00% Oct.-Dec., Inflation 3.80% Jan.-Mar. Inflation 4.20% Average 4.20%
[Inflation 2024/25 _ 4.80% 2025-26_4.20%]
The RBI, which has fulfilled its 5-year expectation,
can also expect a reduction in interest rates on home and auto loans.
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