The RBI Repo Rate cut by 50 bps to 5.5% has given great surprise to the country. The RBI Governor Sanjay Malhotra announced a cut in the repo rate by more than the expected percentage during the Monetary Policy Committee (MPC) meeting for the year 2025-26. Earlier, the Repo Rate was at 6.0% & now has come up to 5.5%. Suppose we consider that it is the third time in a row that the Central Bank has cut its repo rate. The majority of economists out of 15 in total were of a view to encourage the 25 bps repo rate cut to let the running market stance sustain. However, a surprising outcome has influenced the market.
What Is Repo Rate?
Repo Rate is a standard percentage at which the RBI grants loans to the public sector banks to support them whenever & wherever needed. The variation in repo rate has a direct impact on Loan EMIs. Therefore, now it will cut short the loan EMIs for the general public, and especially for the home buyers.
100 BPS Cut In The CRR
Malhotra confirms that MPC has decided to cut the CRR (Cash Reserve Ratio) by 100 basis points at 3% from 4%. In the last four consecutive cuts in the CRR of 25bps each on Sep 1, Oct 4, Nov 1, & Nov 29, this financial year has changed the scenario.
The recent cut in CRR would liquidate ₹2.5 trillion and will have an impact on the cut in repo rate to reduce the lending rates. In January, RBI fuelled the banking system for durability with ₹9.5 trillion, he added.
The MPC has decided to carefully supervise the data flow & its outlook, which will help in forming better Monetary Policies in the future. It will also help focus on the variations to cope with them timely.
Economic Growth Forecast Of India
In a recent report, it was found that the world economy is facing serious challenges after US President Donald Trump announced new business tariffs. It has lowered international funds and directly impacts the global growth forecast.
However, financial experts believe that new US tariffs have boosted the Indian economy. India is also going to benefit from the Indo-US trade deal in the first phase that may take place before July 9.
The Indian economy was estimated to grow at 7.4% in the fourth quarter of FY2024-25. It was also projected to reach 6.5% for FY2024-25.
As per the report, the growth rate for the FY2024-25 and the March quarter for FY2024-25 were recorded lower than the statistics of the FY2024. In FY2024, the Q4 growth rate was 8.4%, and the full fiscal year growth rate was recorded at 9.2% (Revised Rate).
Rent Payment Via Credit Card
The monthly rent payment using Credit Cards is under strict observation. However, no fixed rules have been imposed on the house rent payment using credit cards so far. Some charges are applied on every such transaction such as transaction fees and interest rates on the overdue credit card payments.
Conclusion
The recent change in the Bank’s Repo Rate will have a direct impact on the real estate market in India. The reduction in home loan rates will encourage unexpected growth in the real estate business.
Now, property buyers and real estate investors can work out home loans at an affordable rate. You can hire a professional real estate consultant to help you benefit from the latest amendment in the repo rate of banks.