There is news of relief on Home Loan or Car Loan for the present time but after May its rates may also increase. However, there may be an increase in interest on FD and other savings schemes.
There is news of relief on Home Loan or Car Loan for the present time but after May its rates may also increase. However, there may be an increase in interest on FD and other savings schemes. This is because the RBI announced not to tamper with the major interest rates on Friday. After the meeting of the Monetary Policy Committee, Reserve Bank of India (RBI) said that the repo rate will be retained at 4% (repo rate @ 4%).
RBI Governor Shaktikanta Das said that the reverse repo rate (Reverse repo rate @ 3.5%) also remains at 3.35%. But it is proposed to increase the CRR gradually. According to RBI, CRR will be increased from 3 percent to 4 percent. It will be increased to 3.5% on 27 March 2021 and then to 4 percent on 22 May 2021.
According to experts, cash reserve ratio (CRR) is more important role than repo rate and reverse repo rate. It is directly related to the customer’s emi. The bank has to deposit a part of the total cash reserve with the Reserve Bank. This amount is kept for the time of trouble. It is used on problems with the bank. If this increases, banks will have to keep a much larger amount in the Reserve Bank. With this, they will be able to distribute less debt. For liquidity, they may have to increase interest in FD and other savings schemes so that more and more people can invest in these schemes and the bank can fulfill their needs.
Special features of the policy
– Growth outlook shows rapid improvement
– Supporting growth is the need of the hour
– The beginning of a new era of economy in 2021
– Rapid improvement in domestic business
– Increased confidence from home sales
Interest rate has not changed three times
After reviewing the earlier monetary policy, the major interest rate repo rate was kept constant at 4 per cent. At the same time, the reverse repo rate also remains at 3.35 percent. Repo rate is the interest rate at which the Reserve Bank gives short-term loans to other banks, including SBI. If there were cuts, banks would have to pay less interest to the RBI, like banks charge interest as emi after giving loans to their customers. If there was a cut, it would have an effect on your emi too.
Conversely, if the Reserve Bank raised the repo rate, it would have become expensive for banks to take loans. This would increase the interest rate for Home loan, Car loan and other loans. However, this happens only when the demand in the market is good. Due to Coronavirus, the demand of loan is going down in the market at this time. Therefore RBI has kept it stable.
The reverse repo rate is the rate that RBI pays to banks as interest. Banks keep their money with the Reserve Bank. RBI pays interest on this. As the liquidity in the market increases, the RBI changes this rate so that banks pledge large sums to them to earn more interest.
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