Repo Rate Cut Will Be A Boon For Consumers

Good News for Indian consumers
Banks have not yet decided or announced it but the latest cut in repo rate by Reserve bank of India by 0.25% or 25 basis points bringing it down from 7.75% to 7.5% should help reduce the EMI of house and car loans for consumers of the country. Let it be known to all that the repo rate is the rate at which the Reserve bank of India provides loans to other banks. The important factor is that this is another cut in repo rate with in a period of one and half months as there was a cut of 25 basis points on 15 January, 2015 also. 

Why does the repo rate go up or down?
There is a simple reason for repo rate to go up or down, the Reserve bank of India decides to take this decision based on overall inflation rate and for the time being the inflation rate is going down constantly the governor of RBI decided to pass it on to banks so that it could be ultimately passed on to consumers. However the decision to bring the repo rate will help the cause of common men which will reduce the EMI substantially. 


The benefits

1- Bringing the repo rate down will reduce interest on auto and home loans

2- Market sentiments will go up that will help industry as well the purchasing power of general consumer

3- It will help increase the Bond-portfolio value of the banks, the lower interest rate will help finance institutions

4- It will help our corporate sector as the interest rates will go down and they will have to pay lesser for their production

5- Companies will find it more profitable increasing their equity in sentiments in place of share market. This could also motivate our government in disinvestment and bring more money from private sector

6- More loans to consumers and corporate mean more consumer investment which initiates direct growth of economy that in turn enhances the chances of creating more employment for youth and professionals. Let’s hope the economy of our country develop at a brisker pace in near future.     

Article Posted By : sunylView All Articles

Suny

Article Source :

http://www.veethi.com/articles/repo-rate-cut-will-be-a-boon-for-consumers---article-3444.htm

Keywords :
Repo rate , RBI , Governor , Consumer , Corporate , Interest rate , Banks , Disinvestment

Comments

Submit an Article

Related Articles