RBI– Good news for common people. The Reserve Bank of India (RBI) has taken a big decision in its monetary policy meeting on June 7, 2025, which will provide relief to the loan takers. RBI has cut the repo rate by 50 basis points (0.50%), due to which this rate has now come down from 6% to 5.50%. This reduction is more than the market’s expectations and this is the third consecutive time that the repo rate has been cut. Earlier, there was a cut of 25-25 basis points in February and April.
What does it mean to reduce the repo rate?
A lower repo rate means that banks will be able to borrow money at a cheaper rate, which will enable them to provide cheaper loans to customers. This will have a direct impact on your home loan EMI, i.e. your EMI may be reduced.RBI has also reduced CRR (Cash Reserve Ratio) by 1% to 3%. This will make more money available to banks to give loans. Also, SDF rate has been reduced to 5.25% and bank rate to 5.75%.
RBI Governor Sanjay Malhotra said that inflation remains below 4% and GDP growth is also satisfactory. The purpose of reducing the repo rate is to increase spending in the market and give momentum to the economy.
If banks give the benefit of the entire reduction to the customers, then the home loan interest rates can again come down to 7.5%. This can provide relief of about Rs 2000 in the EMI of a loan of Rs 30 lakh for 20 years.
Overall, this decision is not only beneficial for loan takers but is also a positive signal for the entire economy.
foreign exchange reserves
The RBI governor has said that India currently has foreign exchange reserves of $691.5 billion dollars. That means we have so much money that we can easily buy essential foreign goods (such as oil, machines, medicines) for about 11 months.