Big relief for home loan, auto loan takers, RBI cuts repo rate by 25 bps

In a good news for markets and consumers, the Reserve Bank of India on Thursday chose to go for another round of rate cut, third in a row, to prop up the economic growth. The RBI has cut benchmark interest rate by 0.25 per cent to bring down the interest rate. Slashing the repo rate by 25 bps by RBI is in sync with the expectations of the finance domain experts. The central bank had cut the short-term lending rate (repo rate) by 25 basis points each in its last two policy reviews. 

"RBI will not hesitate to take any measure which is required to maintain the financial stability of the system including, shot-term, medium-term and long term," says RBI Governor Shaktikanta Das.

The MPC headed by RBI Governor Shaktikanta Das met for three days beginning June 4 to firm up the second bi-monthly monetary policy of the fiscal. India's largest bank SBI in a recent research report had said that the RBI needs to go in for a larger rate cut, more than 25 basis points, in the next monetary policy review in June to reverse the current slowdown in the economy. Here are top details to know from RBI Credit Policy June 2019:-

- RBI has cut repo rate by 25 basis points; now at 5.75% from 6%. Reverse repo rate and bank rate adjusted at 5.50 and 6.0 per cent respectively.

- GDP projection adjusted to 7.00 % from 7.2 % in earlier projection

- Inflation outlook at 3.0%-3.1% in first half of 2019-20 and 3.4%-3.7% in second half of the year

- RBI has decided to do away with charges levied on RTGS and NEFT transactions, banks will be required to pass this benefit to their customers

- RBI has been decided to set up a Committee involving all stakeholders, under the chairmanship of CEO Indian Banks’ Association (IBA), to examine the entire gamut of ATM charges and fees. Committee to submit its recommendations within two months of its first meeting.

The RBI decision of rate cut may prove to be a big relief for home and auto loan borrowers.