Mumbai, Feb. 8 -- The Reserve Bank of India's (RBI) monetary policy committee on Friday delivered a much-anticipated rate cut of 25 basis points, taking the policy (repo) rate to 6.25%. The first rate cut in five years, the Monetary Policy Committee's decision will lead to lower equated monthly instalments or EMIs by retail borrowers by an equivalent amount, provided their rates are linked to the policy rate.
Repo rate is the interest rate at which commercial banks borrow from RBI.
As of September 2024, over 59% of all floating rate loans were linked to an external benchmark, while 37% were linked to MCLR. A change in the policy rate, therefore, translates to an equivalent change in the external benchmark rates of banks.
Retail borrowers...