RBI Governor Sanjay Malhotra stated that the central bank has adopted a neutral stance, indicating readiness to adjust policies based on economic conditions. He acknowledged global economic challenges but affirmed that India remains resilient despite external pressures.
The rate cut is expected to lower equated monthly instalments (EMIs) for borrowers, as banks may revise lending rates. This decision follows the Union Budget 2025 announcement, which introduced tax exemptions on earnings up to ₹12 lakh, further boosting disposable incomes.
Impact on Borrowers
Since most bank loans are linked to the external benchmark lending rate (EBLR), a repo rate reduction will lower interest rates. For instance, on a ₹10 lakh car loan at 9% interest over five years, the EMI will drop from ₹20,758 to ₹20,637 after the cut.
Experts anticipate that leading banks will soon revise their rates in response, making loans cheaper and boosting consumption and investment.
The post RBI Cuts Repo Rate by 25 bps to 6.25%; Loan EMIs Set to Ease appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates.
