RBI cuts repo rate by 0.5 percent

The Reserve Bank of India (RBI) has reduced the repo rate by 0.50% to 5.50%. This means that loans will be cheaper in the coming days and EMI’s will also decrease.

RBI Governor Sanjay Malhotra gave information about the decisions of the Monetary Policy Committee meeting today on June 6 at 10 am. This meeting started on June 4. The rate at which RBI gives loans to banks is called repo rate. It is increased and decreased to control inflation.

This year the repo rate was reduced by a total of 1%

In the meeting held in February this year, the interest rates were reduced from 6.5% to 6.25%. This reduction was done by the Monetary Policy Committee after about 5 years.

Then in the meeting held in April also the interest rate was reduced by 0.25%. Now the rate has been reduced for the third time. That is overall, the Monetary Policy Committee has reduced the interest rate by 1% in the last three meetings.

What changes will happen with the reduction of repo rate?

After the reduction of repo rate, banks also reduce their interest rates on loans like housing and auto. If interest rates are reduced, then housing demand will increase. More people will be able to invest in real estate. This will give a boost to the real estate sector.

₹ 2.5 lakh crore will come into the financial system due to reduction of CRR

RBI Governor Sanjay Malhotra said that it has been decided to reduce the Cash Reserve Ratio (CRR) by 1% from 4.00% to 3.00%. He said that with this move of RBI, ₹ 2.5 lakh crore will come into the financial system.

CRR is the money that banks have to keep a part of their total deposits with the Reserve Bank of India (RBI). With this, RBI controls how much money will remain in the market. If CRR is reduced, then banks have more money to give loans, like this time a 1% reduction will bring ₹2.5 lakh crore rupees into the system.