A number of students aspiring for bank jobs or Aam Bankers have asked me, what will the impact of cut in repo rates. Let me try to explain the same to our readers, as how it is expected to impact different segments :- A cut in repo rate means that banks can borrow from RBI at lower rates under LAF facility. This allows the banks to cut their base rates and thereby lower lending rates for corporate borrowers as well as retail borrowers. We can also say that this will have a positive impact on the Indian economy as banks will lower their lending rates which in turn will help in revival of Indian economy. It is also likely to boost investment in Indian economy and help in higher demand in the economy. For a middle class person, it can result in lower EMIs for their Car and Housing Loans. However, banks are also likely to simultaneously cut their Deposit Rates. Therefore, if you intend to put money in Fixed Deposit, do it before banks reduce their deposit rates, may be as early as this week itself.
Posted on: Thu, 15 Jan 2015 08:41:17 +0000