Yesterday RBI cut the Repo Rate for the 3rd time in this year. Raghuram Rajan also hinted that there will be no more rate cuts this financial year. RBI cut the repo rate by 0.25% and it will bring down the auto loan, corporate loan and home loan.
The repo rate is the rate at which the central bank lends to other commercial banks.
Key Features of this Repo Rate cut:
a.) Repo Rate is reduced to 7.25% from 7.5%.
b.) No change in Cash Reserve Ratio (CRR); which is at 4%.
c.) No change in Statutory Liquidity Rate (SLR); which is at 21%.
d.) Rajan asked banks to pass on the 0.75% rate cut.
e.) Cut down the projection for output growth for 2015-16 from 7.8 per cent in April to 7.6 per cent with a downward bias to reflect the uncertainties surrounding these various risks.
f.) Rajan expressed concern over the recent rise in crude prices.
Ultimate Beneficiary:
Surely, Individual or corporate borrower will be ultimate beneficiary of this rate cut if banks reduce the interest rate on various kind of loans. As till now majority of banks haven’t passed this 0.75% repo rate cut by RBI.
