RBI's 50 BPS RATE CUT - WHAT IT MEANS FOR THE COMMON MAN
The Reserve Bank of India’s (RBI) Monetary Policy Committee’s (MPC) decision to cut the repo rate by 50 bps was more than what was expected by many economists.
Most of the economists expected the MPC to cut the repo rate by 25 bps owing to reduced inflation, prospects of economic growth, and comfortable liquidity. However, the six member MPC committee went the whole hog of slashing the repo rate by 50 bps. The repo rate is the rate at which the RBI lend's to the banks.
A reduction in the repo rate would mean that bank loans will be available at cheaper rates. This will give a boost to the housing sector, infrastructure development and industry capex, thereby supporting overall economic growth.
Banks and NBFCs will be able to lend more thereby increasing their profit margins. Some banks & NBFCs to keep a watch are