Retail Loans to Get Cheaper as Key Rate Cut 1st Time in 5 Years

Monetary Policy Committee, headed by Reserve Bank of India governor Sanjay Malhotra, slashes repo rate by 25 basis points to 6.25%

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Interest rate on retail loans, including home and auto, is likely to fall soon as the Reserve Bank of India under a new Governor on Friday cut the key benchmark rate for the first time in almost five years to spur a sluggish economy.

The Monetary Policy Committee, headed by RBI Governor Sanjay Malhotra, slashed the repo rate by 25 basis points to 6.25 per cent. This was the first reduction since May 2020.

Repo rate is the rate at which the RBI lends to other banks.

In his first Monetary Policy announcement on Friday, Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that the Monetary Policy Committee (MPC) had unanimously decided to reduce the policy rate by 25 basis points (bps) from 6.5 per cent to 6.25 per cent.

The RBI Governor said India can certainly achieve 7 per cent or above growth and that should be what the country should aspire for.