Repo rate cut paves way for decrease in interest rates for loans
The Reserve Bank of India (RBI) has slashed its repo rate by 25 basis points. After demonetisation, banks have been flush with funds.
A day before the repo rate was cut, India’s largest lender State Bank of India (SBI) had tried to decrease the cost of its deposits by lowering the saving bank account interest rate from 4 percent to 3.5 percent.
This 50 basis point cut has also paved the way for a similar decrease in interest rates for loans. The new repo rate is now down to 6 percent, the lowest in more than six-and-a-half years.