RBI New Rule: If you pay a hefty EMI on your home loan or car loan every month, there’s good news for you. Now, your EMI can be reduced, and neither has the RBI reduced the repo rate, nor has any bank launched a special scheme. Rather, the solution lies in your CIBIL score. Yes, the same score that determines whether you get a loan can now also reduce your EMI.
Why is a CIBIL score important?
The CIBIL score is a measure of your financial reliability. It ranges from 300 to 900, and the higher the score, the more easily banks are willing to lend to you and at a lower interest rate. This score is determined based on your past loans, credit card payments, and financial discipline. Most people only check this score when they need a new loan. Regular monitoring of this score has become essential.
Read Here: Farmers’ installment amount to increase to Rs 4000! know good news
RBI Issues New Circular
The Reserve Bank of India (RBI) has issued a new circular effective October 1st. Under this circular, the three-year lock-in period for banks on spreads has been removed. Previously, banks could not change the spread on a loan for three years, but this will no longer be possible. This means that if your CIBIL score improves, you can then request a reduction in EMI from the bank.
Learn What a Bank Spread Is
When you take out a loan, your interest rate is made up of two parts: the first part is the RBI’s benchmark rate, and the second part is the bank’s spread. The benchmark rate is determined by the RBI’s decision, but the bank spread depends on your personal financial score and the bank’s policy. Previously, this spread could not be changed for three years, but now the RBI has lifted this restriction.
Read Here: Bihar Weather Forecast – Heavy Rain Alert in 29 Districts, IMD Issues Strong Winds
Now increase your CIBIL score and reduce your EMI.
If you’ve recently repaid an old loan or your credit card dues are clearing on time, your CIBIL score will likely have increased. In this case, you can contact your bank and request a reduction in EMI based on your improved credit profile. If the bank refuses, you can show the latest RBI circular, as it is no longer prohibited from doing so.