KOCHI: A small relief for those who have taken loans from banks. The Reserve Bank has reduced the key interest rate by a quarter of a percentage point. The repo rate, which is the interest rate on loans taken by banks from the Reserve Bank, has been reduced from 6.50 to 6.25 percent. With this, banks will be able to reduce interest rates on housing, vehicle, personal, corporate, gold mortgage and agricultural loans. EMIs of various loans of Rs 10 lakh may be reduced by up to Rs 150 per month.

Reserve Bank Governor Sanjay Malhotra said that the Monetary Policy Committee unanimously decided to cut interest rates as the inflation is coming under control. He also said that the approach that emphasizes economic growth will continue. The previous interest rate cut was in May 2020. Since then, as inflation had risen, the Reserve Bank had increased the interest rate by 2.5 percentage points six times to 6.5 percent.

Home Loan

Change in interest rate on a 20-year Rs 50 lakh home loan when the interest rate is reduced from 9 percent to 8.75 percent

Current interest: Rs 57.96 lakh

New rate: Rs 53.6 lakh

Profit: Rs 4.36 lakh

EMI: Rs 44,986

Vehicle Loan

Amount: Rs 10 lakh

Current EMI: Rs 20,953

Now: Rs 20,843

Profit per annum: Rs 1,464

Gold Mortgage Loan

The interest rate on a gold loan of Rs 1 lakh will be reduced from 9% to 8.75%. A profit of Rs 150 per year