STOCK MARKET BSE NSE

Rate slashed again, expect lower EMI 

In fact, the average lending rates for existing loans showed a 7 bps increase during that period.

Published: 05th October 2019 08:30 AM  |   Last Updated: 05th October 2019 08:30 AM   |  A+A-

money, 100 rupee note, india economy, indian economy, money, cash, currency

(File photo | Reuters)

Express News Service

MUMBAI:  The Reserve Bank of India’s Monetary Policy Committee on Friday stuck to its conservative 25 basis points (0.25%) cut in the policy rate to 5.15%, disappointing markets, though it promised to do more to revive economic growth.This was its fifth rate cut in a year. But banks haven’t shared the enthusiasm, as four RBI rate cuts between February and August totalling 110 bps resulted in banks bringing down their rates by just 29 bps. In other words, banks were miserly in bringing down your home or car loan rates. In fact, the average lending rates for existing loans showed a 7 bps increase during that period.

After some flogging by the government, banks have now been mandated to move their floating rate on retail and MSME loans to an external benchmark, ending their discretion and internal cost based loan rate setting since October 1.But would it mean a commensurate cut in loan rates? The Oriental Bank of Commerce was among the first on Friday to announce that repo-linked lending rates would come down by 25 bps immediately, reflecting the new reality of external benchmarking. 

“But given the flexibility to charge a spread/mark-up, considering other costs, the final lending rates are yet to come down in a commensurate manner,” CRISIL said in a research note. “Monetary transmission remains a work in progress,” said RBI Governor Shaktikanta Das.

“The monetary policy speech today clearly focused on growth and has done so by reducing the repo rate by 25 bps. This indicates an immediate reduction in borrowing cost for some segments of borrowers. For others it will come down over the course of time,” said Abheek Barua of HDFC Bank. Analysts see the central bank’s promise of a continued “accommodative” stance as a clear indication of further rate cuts in future. 



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp