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RBI cuts repo rate
Posted on: 05/Apr/2016 2:23:43 PM
Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. The new repo rate is now 6.50 percent as the central bank reduced it after a gap of six months. Repo rate was lowered by 150 bps since January last year, when RBI begun its accommodative cycle.
Governor Raghuram Rajan said the latest policy action would be far more effective now as banks moved to marginal cost-based lending from April 1.
According to bankers, the reduction in repo rate - which is the rate at which Reserve Bank lends short-term funds to lenders - is likely to result in lower loan EMIs.
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