Your EMI may go down

Reserve of India finally reduced repo rate by 0.25% to make it 7.75% from 8%. By the way the Repo rate is the rate at which the Reserve Bank of India lends money to all commercial banks in case these banks need funds. It’s being considered a big step from the governor of Reserve Bank of India just before the bio-monthly economical review due on February 3, 2015. However this move by the Reserve Bank of India will encourage housing sector that was waiting for this move for a long time now.

It will boost up economy

I feel this move of reduction in repo rate is a clear indication of RBI (Reserve Bank of India) that will trigger the reduction in interest rates for different industrial sectors suffering from shortage of demand. The move will also help expedite the progress rate of industrial development by way of bringing further investment. The reduction in repo rate is according to commitment of our Prime Minister’s development promises to improve Indian economy. The Indian industry will not develop unless the common has the cash in hand to spend more on products made in India.  

The sectors to benefit from this move

The sectors that will be most benefited with this move of RBI are going to be Housing, automobile and consumer durables. Some of the leading Indian banks have already started the process of reducing interest rates by 0.5%. It will certainly speed up manufacturing and help restarting many construction works which were expecting interest reduction for a long time. The move will help middle classes’ dream of owning a house with reduced EMI. 

The expectations

Reduction in repo rates will allow banks to reduce interest rates that will have direct affect on EMI.

Reduction in repo rate will impose lesser interest rates on manufacturing units that will reduce the cost price of productsIn turn Indian companies will reduce the prices of their products to stay in the stiff competition given by the multinationals.

Banks will lend more in real estate sector which will directly affect consumers to pay easily and still save more for other daily household expenses. 

The more money in hands of consumers might increase prices but that will help boost up the economy indirectly.

Article Posted By : suny  On January 16, 2015lView All Articles

suny

Article Source :

http://www.veethi.com/articles/the-reduction-in-repo-rate--article-3384.htm

Keywords :
RBI , Bank , Loan , EMI , Industry , Infra structure , Interest , Indian , Economy