RBI’s New Mission Getting Banks To Lower Your EMIs

April 04, 2016: The RBI Governor, Raghuram Rajan wants to get banks to lower their lending rates and making EMIs cheaper. RBI is going to do an experiment in the case of lending rates, forcing banks to reduce their rates. This experiment can be a riskier one but definitely, it will lower the costs for borrowers.

 

RBI Lending Rates

 

According to the new rule, the banks will need to improve their lending rates every month on the basis of their offer for new fixed rate deposits. The Reserve Bank of India is not happy with the banks as despite cutting its key repo rate by 125 basis points last year; the banks reduced lending rates by only about 60 basis points.

This new rule will come into an effect from April 1, starting of a new fiscal year. The industry is expecting a rate cut from RBI by another 25 basis points in the monetary policy that is going to be held on April 5, 2016.  This rate cut is likely to boost India’s economic growth and investment outlook.