RBI Cut Repo Rate: A Cheers for Real Estate Investors

Reserve Bank of India has recently cut the repo rate by 25 bps. There are investors who are either unaware of the news or unable to interpret it. So, take a look at this post to know how it can bring cheers to you.

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RBI Cut Repo Rate
RBI Cut Repo Rate

Much to the delight of real estate investors, RBI has done deduction in the repo rate by 25 basis points (BPS) to get it down to 6 bps. You all will be glad to know that the current repo rate is the lowest since November 2010. On and on, RBI has slashed the repo rate by 150 bps since April 2015.

But, here the actual question arises that how this reduction in repo rate will bring cheers for real estate investors? For this, you have to dig deeper into this matter, understand some financial terminologies and read this post attentively so that you won’t miss even a word.

Repo rate is basically defined as the rate at which Reserve Bank of India lends money to commercial banks when they face a financial crunch and are unable to bear their expenses. Repo rate is usually used to control inflation by monetary authorities. After this latest move, reverse repo rate has also been slashed to 5.75 % from 6 % and Marginal Standing Facility (MSF) has been adjusted at 6.25%. Whereas Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio are unchanged at 4% and 20%, respectively.

With everything taken into consideration, this will ultimately bring down the equated monthly instalments (EMIs) paid towards a home loan. The prices for a real estate project is expected to come down due to the implication of Goods and Service Tax (GST), and a cut in the rate of interest, in combination, will bring some relief to this sector. Apart from this, the festive season is approaching at a very fast pace, so the banks will be able to pass this benefit to the investors, which will help them in getting a greater footfall in the coming months.

The industry experts have also welcomed this step with open arms. Everyone wants the real estate sector to blossom again as it used to, a few years back. These initiatives might look small but they holds a potential to leave their imprints on a longer run. We, as your well-wisher would like to tell you that it is not possible for us to bring all information and details in a single post. So, it is always advisable to consult a professional and have a meeting so that things become simpler for you.

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