RBI hikes repo rate by 0.50%

RBI Governor Shaktikanta Das

New Delhi – Reserve Bank of India (RBI) has hiked the repo rate by 0.50%, taking it to 5.90% from 5.40%. It will result in raising interest on various loans such as housing, vehicle, personal, etc. leading to an increase in the EMI (Equated monthly instalment) for the borrowers. The above information was given by RBI Governor Shaktikanta Das at a press conference. The repo rate was increased from 4.90% to 5.40% in the meeting held in August.

Consequences of hike of 0.50%

If a person borrows Rs. 30 lakhs as a housing loan with 8.05% interest for a 20-year repayment period, his EMI will be Rs. 25,187/- which means he will end up paying Rs. 60,44,793/- for the loan of Rs. 30 lakhs, when earlier for the same loan amount, he had to pay as Rs. 58, 42,000/- with 7.95% interest for 20 years.

(Credit: Zee Business)

What is the repo rate ?

The rate at which banks borrow money from RBI is known as the repo rate. A hike in the repo rate means an increase in the interest rate on loans taken from RBI. A decrease in the repo rate means banks will get loans at a low rate of interest; therefore, people have to pay more when the RBI increases the repo rate.