Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates on Wednesday for a second consecutive time and signalled more easing to come as it sought to bolster the economy that is facing further pressure from damaging US tariffs.
The Monetary Policy Committee (MPC), consisting of three central bank members and an equal number of external members, voted unanimously to cut the repurchase or repo rate by 25 basis points to 6 per cent.
It had reduced rates by an equal measure in February -- the first cut since May 2020.
The repo rate is the rate at which the RBI lends money to banks to meet their short-term funding needs. With a 25 bps cut in the repo rate, all external benchmark lending rates (EBLR) linked to it will come down.
And if the banks fully pass on this to the borrowers, equated monthly instalments (EMIs) on home, auto and personal loans will decline by 25 bps. -- PTI