Loans To Get Cheaper As RBI Cuts Repo Rate By 50 BPS

The Reserve Bank of India today announced a surprising repo rate cut by 50 basis points to 8%. After reducing the basis points, now loans especially cars and home loans will be cheaper. However RBI did not change CRR (cash reserve ratio) and it remains at 4.75%. The RBI has also eliminated the pre-payment penalty on home loan.

RBI Governor D. Subbarao

Market was demanding the cut from RBI for long and by announcing the repo rate cut for the first time in three years RBI has send a strong signal to the investors that RBI gives equal importance to both inflation and growth. Earlier the RBI had increased interest rates 13 times from March 2010.

RBI governor Subbarao said, “A strategy to increase the economy’s potential by focusing on these constraints is an imperative.” “Monetary policy needs to support growth without risking external balance or inflation by excessive fueling demand,” he added.

Currently the inflation rate is 6.9% and the RBI expects a GDP growth of 7.3% in 2012-13 fiscal year.

• About the Author

About Sprightly Spirit

“I dare do all that may become a man. Who dares more is none”. And all, may be. It may be the vigor. Or the spirit. Or the courage to avoid being “politically correct” or bent. And, ban all averse with immaculate overture of graciously fathomable words firm in views. Subtle. Justifying the undying conscience. Values. Knowledge. And, dares to stay true. True to own. True to the world. And, to the words. With a dream in eyes it exists. In you. In me. In all. The sprite that never shies away. The spirit that never dies!