On June 6, Thursday, the Reserve Bank of India (RBI) brought down its key lending rate for commercial banks by 0.25 per cent which means now the home loans along with other loans will become cheaper. In what can be called a relief for the middle class, the RBI brought down the repo rate to 5.75 per cent from 6 per cent.
Repo rate is the interest rate at which commercial banks borrow short-term funds from the RBI.
The policy decision was announced by RBI's Monetary Policy Committee (MPC), led by governor Shaktikanta Das, amid slowing economic growth and global uncertainty. The decision comes after a three-day meeting of the MPC and has resulted in a third repo rate cut by RBI in the last six months.
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The lower repo, or short-term lending rate for commercial banks, will bring down the interest cost on the automobile and housing loans, to boost growth.
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