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A lower repo reduces banks? borrowing expenses goading them to cut interest rates for final home, car as well as corporate consumers. So, can people expect their EMIs to reduced? Not immediately. A lower repo may bring down expenses for banks, however banks normally provide lower interest rates just for brand new consumers. Besides, a lower rate of interest does not automatically represent EMIs comes down due to the fact the banks may initial provide the possibility to improve the tenure of the loans very than reducing monthly installments. Precisely what about loans on vehicles and additionally customer merchandise? Automobile and also buyers goods loans are all upon fixed interest rates and, subsequently, existing shoppers are not suffering with changes in RBI?s policy rates. Precisely what if I have a particular existing home and additionally want to shift to a brand-new loan provided by a different bank at only a lower interest rate? In a move which may bring relief to consumers, the RBI has replied, henceforth, banks are not allowed to levy foreclosures charges or perhaps pre-payment fees on home loans upon a flying rate of interest. This implies which if you would like to close some kind of existing loan by borrowing from yet another bank because it is giving out a lower rate of interest, you'd not be needed to shell out just about any penalty to the initial bank. Just what is reverse repo rate? It is the rate where the central bank borrows from banks to absorb or perhaps release cash from and additionally into the program. It presently stands at seven.0%. Just how does it impact banks? lending rates? At higher reverse repo, the central bank might blow money from the system to stymie need and also cool price ranges. A lower reverse repo signifies that banks might be persuaded to offer to other borrowers to profit more instead of park its funds alongside the RBI which definitely will fetch lower comes back. Exactly what tend to be plan rates? The insurance policy pace functions the guide for final lending rates which banks charge from borrowers. In tight liquidity scenarios, the repo pace will act as the plan speed. In scenarios of excess liquidity, when banks park funds with the RBI from their swimming pool of lendable resources, the reverse repo pace acts the insurance policy pace. Exactly what role do insurance policy rates portray in pricing control? Until October, the RBI had raised the repo speed thirteen times in 19 months to tame prices. A higher repo would increase banks? borrowing fees, which would definitely raise rate of interest upon home, car as well as corporate financing. A higher reverse repo would give banks incentive to park money with RBI, reducing liquidity and also need. What motivated the RBI to slash policy rates? The string of interest rate hikes could have tamed expansion but eroded growth in the broader economic climate. The industry happens to be demanding for lower interest rates, as businesses, squeezed by expensive borrowing and also input expenses, have deferred planned capacity expansions. Can we expect a lot more interest rate cuts in the coming months? If inflation is still high, the RBI might hold back further repo rate cuts. Wholesale price point index (WPI)-based inflation, India?s most watched cost of living index, was at only 6.9% in March, but possible to go up in the coming months adopting the announcements earned in the budget previous days. How definitely will budget announcements push up inflation? Within the budget, finance minister Pranab Mukherjee had raised excise duty with two percentage points to 12% for many made of products and additionally added more solutions which will be taxed. This makes many services and also produced products like automobiles as well as customers durables costlier.