Home, auto loan EMI rates dip following RBI's new monetary policy

Thursday 10 April, 2025 | 12:27 AM READ MALAYALAM VERSION

KOCHI: It is good times ahead for people grappling with home and auto loans. The Reserve Bank has reduced the key interest rate by a quarter of a percentage point. This is the second consecutive time the rates have been reduced. With this, the repo rate has reached six percent. The interest rate was also reduced by a quarter of a percentage point in February.

The Reserve Bank of India (RBI) has decided to strengthen the financial sector to face Donald Trump's trade war. RBI took a pro-growth stance in the face of the US's 26 percent tariff. Governor Sanjay Malhotra announced the interest rate cut after Wednesday's Monetary Policy Committee meeting.

The Standing Deposit Facility rate, which is the interest earned by banks when they deposit excess funds with the Reserve Bank, and the marginal standing facility rate, which provides banks with quick access to funds, were reduced by a quarter of a percentage point. This will allow banks to have more money.

The policy stance has been changed from 'neutral' to 'accommodative'. The GDP growth target has been reduced from 6.7 to 6.5 percent. Inflation is expected to fall to 4 percent. The trade war will be a setback for the Indian rupee.

Banks may reduce interest rates on deposits from the next day as the availability of money in the market increases.

Change in interest rate on a 20-year Rs 50 lakh home loan when interest rate is reduced from 8.75% to 8.5%