Reserve Bank of Indiana (Reserve Bank of India) Governor Shaktikant Das on Wednesday, May 4, 2022 in the repo rate (Repo Rate) Announced an additional 40 basis points. After this increase Repo rate It has risen to 4.40 per cent. The repo rate hike has come into effect with immediate effect. Rising policy rates will make all types of loans more expensive, including home loans and auto loans. The burden of EMI will increase on the common man. The RBI held a meeting between May 2 and May 4.
At this meeting, the MPC unanimously voted in favor of raising the rates. The RBI has hiked the CRR by 0.50 per cent. The RBI has increased the cash reserve ratio and CRR by 0.50 per cent. The cash reserve ratio rose 0.5 per cent to 4.50 per cent. There is no change in the reverse repo rate. Das said that with the increase in CRR, Rs. 87,000 crore liquidity will be returned.
Extra effect of repo rate on your pocket
An increase in the repo rate increases the EMI of the loan. Just as we take loans from banks for our needs, banks also take loans from the Reserve Bank for their own needs. The rate at which the Reserve Bank lends to banks is called the repo rate. If the Reserve Bank raises the repo rate, loans like home loan, car loan, personal loan from the bank will also become expensive for you.
How CRR affects the common man
If the CRR goes up, banks will have to keep a large stake in the Reserve Bank and they will have less money to lend. This means that banks will have less money to lend to the common man. If the Reserve Bank lowers the CRR, the cash flow in the market increases.
How much will the EMI increase?
After raising the repo rate, banks will now raise interest rates on loans. If banks raise interest rates by 0.40 per cent, the EMI of loans will increase significantly. The current home loan interest rate is 6.70 per cent, which will now rise to 7.10 per cent. You can understand it this way. If you take a home loan of Rs 30 lakh for 20 years at an interest rate of 6.70%, the EMI is Rs 22,721. On the other hand, if you raise the interest rate by 0.40 per cent, the new rates will go up to 7.10 per cent and your EMI will go up to Rs. Will be 23,439. This will increase the burden on your pocket by Rs 718 per month.
. Source