Wednesday, October 22, 2008

RBI slashes repo by 1% pave way for cheaper loans

Recently the Reserve Bank of India (RBI) has supported the banking system with Rs 145,000 crore funds as the banks were facing liquidity crunch. In order to provide more help to the banks RBI has slashed its key short-term lending rate (repo) by 100 basis points, this has opened road for cheaper home, consumer, corporate and personal loan rates.

This reduction in repo is the first since 2004, which will allow banks to immediately borrow short-term funds from the apex bank at a cheaper eight per cent as against nine per cent till now.

Finance Minister P Chidambaram while addressing the reporters in New Delhi said that this move "will enthuse investors to continue to take forward their investment proposals."

HDFC Bank's Deputy Treasurer, Ashish Parthasarathy said "It is a welcome step and clearly shows that the interest rate regime is now on a descent curve".

1 comment:

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