How Cut in Repo Rates by RBI helps Loan Borrowers to Save Money?

Recently, RBI cuts repo rates by .25 basis points which helps to come Repo Rate at 7.75% which is lowest in last 20 months & in Last 20 Months its the first time when RBI cuts rates. Now we can talk about its effects on retail loan & other markets.

After the Announcement of Cut in Repo Rate- Sensex Up by 600 points & NIfty Crossed 8400 on Index. Raghuram Rajan has clearly indicated that this repo rate cut is a shift in the policy stance of the RBI and the Bank will continue on this path.

Its clear indication of RBI cut further more repo rate to making loans more affordable. on the otherside World Bank also indicated that India will catch up China in 2016 or 2017 in GDP Growth rate. This Year we expects 6.4% GDP growth.

The Finance & Loan industry has  been demanding a rate cut  by the RBI to boost investment and demand growth. With this surprise rate cut of .25%, banks and non-banking financial companies will have more cash to lend as the repo rate cut will infuse much needed liquidity in the market.

As per Sources and Information, Just after the few minutes of Rate Cut- United Bank of India announced a similar .25% drop in its base rate.

State Bank of India & HDFC Bank also intimate the same.

Now you Think how .25% cut in interest rates save more & whats the big deal here: So check this example

If Some one get a Home loan of 20 lakhs at 10.25% for 20 years than he have to pay