The Reserve Bank of India (RBI) slashed it’s lending rates for commercial banks by 25 basis points (bps) to 5.75 percent on Thursday, in a bid to make home and other loans cheaper.
The central bank’ decision was announced by the governor Shaktikanta Das, amidst the concerns of a slowing economic growth and global uncertainty.
Repo rate is the interest rate at which commercial banks borrow short-term funds from the RBI.
The RBI has also changed the monetary policy stance from “neutral” to “accommodative”.
The announcement came after the conclusion after a three-day meeting of the monetary policy committee (MPC), which is led by governor Shaktikanta Das. This is the third repo cut by the Reserve Bank of India in the last six months.
The lower repo, or short-term lending rate for commercial banks, is expected to reduce the interest cost on automobile and home loans, in order to boost growth.
Apart from this the central bank has set up a committee to examine ATM charges and transaction fees for online payments, a cut in these rates would definitely ease consumers to often opt for digital payments.