RBI slashes Repo Rate by 40 basis points in surprise move

New Delhi: The Reserve Bank of India (RBI) has cut the Repo Rate by 40 basis points in a surprise move today. This will make retail loans like home and auto loans cheaper for the end consumers, provided the commercial banks pass on this benefit of rate cut to the customers.

The Reverse Repo Rate has also been slashed by 40 basis points. The new Reverse Repo Rate is now 3.35 percent.

“Five members of the Monetary Policy Committee voted in favour of this cut in rates…the combination of fiscal, monetary and administrative measures will create conditions that will enable a gradual economic revival going forward,” said RBI Governor Shashikanta Das in a video address to the nation. 

Das has also extended the moratorium on loans by another three months till 31 August 2020. 

RBI Governor cut the Repo Rate to 4 percent from 4.4 percent earlier to prop up the economy which is being hammered by the corona-led lockdown.

In March this year, the RBI had cut the Repo Rate by 75 basis points to provide support to the economy. Thus, the central bank has slashed the benchmark lending rate by 1.15 percentage points this calendar year. However, the interest rates on Fixed deposits will also be hit hard with this move. 

"This is another big step which will ease liquidity for developers - the rate cut will not only send out positive signals but will enable banks to lend even more," said Anuj Puri, Chairman, ANAROCK Property Consultants. 

"While the six months moratorium on loans is good, industry has been demanding a one-time restructuring of developers’ loan. That is still desirable and can help the industry immensely in its revival," said Ankush Kaul, President (Sales & Marketing) - Ambience Group,