RBI keeps repo rate unchanged
The Reserve Bank of India (RBI), in its sixth bi-monthly policy statement for the year , pushed the pause button and decided to hold on to the repo rate at 6.25 per cent.
New home loan borrowers may still see enjoy lower equated monthly instalments (EMIs) on their loans because amidst intensifying competition among the lenders, the banks, on their own, may start cutting down rates.
Recently, Economic Affairs Secretary Shaktikanta Das had said, “The exercise of remonetisation that began after scrapping of the old Rs 500 and 1,000 notes on November 8 is “nearly complete” as practically there are no restrictions on withdrawals.” He added, “I am using the word near-complete because this Rs 24,000 limit is there.” The central bank will keep reviewing the weekly limit in the near future, depending on the pace of remonetisation.
While the bank’s base rate will remain stagnant, the marginal cost of funds based lending rate (MCLR) might show a marginal dip. The banks are supposed to review and declare their MCLR every month. Thanks to demonetisation, expect almost all the banks to declare a lower MCLR within 72 hours of today’s RBI announcement of holding on to the repo rate.
Even though the RBI did not cut any rate in its December 2016 meet, in January, the State Bank of India (SBI) had cut its one-year benchmark MCLR by 0.9 per cent, which brought its home loan rate down by 0.50 per cent from 9.1 per cent to 8.6 per cent for women borrowers and 8.65 per cent for others.