It’s 3 times in a row now!
For the third successive time, the Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) has managed to reduce the repo rate by 25 basis points from 6 per cent to 5.75 per cent, the lowest since July 2010. The move will likely bring down the loan EMIs and people will now have more money to spend.
Welcoming the decision, industry has asked the banks to come forward and pass on the reduction of interest rate to the borrowing units, which is desperately required for the knitwear garment exporting units, particularly to MSME exporting units which are suffering further.
“Considering the industries requirements, banks should act immediately. The reduction of interest rate will pave way for the growth of investment and exports,” says Raja M Shanmugham, President, Tirupur Exporters’ Association (TEA).
Industry is of the view that the MPC decision to change the monetary policy stance from neutral to accommodative gives confidence that there would not be any interest hike in the near future.
The monetary policy statement pointed out that the transmission of the cumulative reduction of 0.5 per cent in the policy repo rate in February and April 2019 was 0.21 per cent to the Weighted Average Lending Rate (WALR) on fresh rupee loans and also mentioned that the WALR on outstanding rupee loans increased by 0.04 per cent as the past loans continue to be priced at high rates.
RBI also decided to remove charges on RTGS (Real Time Gross Settlement System) and NEFT (National Electronic Funds Transfer) transactions.
