A 25-basis-point cut in the repo rate by the Reserve Bank : The instalment burden will reduce

New Delhi – The Reserve Bank of India (RBI) has decided to cut the repo rate by 25 basis points to 5.25 per cent from the previous 5.50 per cent. Due to this decision of Reserve Bank of India, the instalment burden on the citizens will reduce. The decision was taken after a three-day meeting chaired by RBI Governor Sanjay Malhotra. This repo rate is the lowest in last few years.

What is ‘Repo Rate’ ?

The rate at which banks borrow money from the Reserve Bank is called the ‘Repo Rate’. An increase in the repo rate means an increase in the rate of lending to banks from the Reserve Bank. A reduction in the repo rate means that the bank gets cheap money. This means that if the Reserve Bank of India increases the repo rate, then the loan of the common people increases and if there is a cut, then the installments of the loan will decrease.