Home loans will soon become cheaper with the Reserve Bank of India announcing a 50 basis points reduction in policy rate to 6.75% -- a move that will compel most banks to soften lending rates. The reduction repo rate- the rate at which RBI lends to banks - from 7.25% has come as a big surprise to the market which had expected only a 25 basis point cut.
Banks, however, may not lower their lending rate by as much as half a point.
"Borrowers would stand to benefit. We can expect thetransmission will happen this quarter," said P Srinivas, MD & CEO of United Bank of India speaking to ET. Following this reduction, the RBI has lowered policy rate by 1.25% since the beginning of this fiscal year.
Speaking to ET, deputy managing director of IDBI Bank B K Batra said, "It will give a very good push in improving the sentiment. It will nudge banks to take action."
Announcing the half yearly policy, the RBI said, "Reserve Bank's stance will continue to be accomm ..
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