India’s largest bank, SBI, is the first bank to link home loans interest rates with RBI’s repo rate. It claims to offer “cheapest home loan” starting at 8.05% interest rate. The scheme is attractive at this point, especially for customers who do not mind fluctuations in EMI with changing repo rates.
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Repo Rate – Repo (or repurchase agreement) rate is the rate at which RBI lends to its clients generally against government securities. Reduction in repo rate helps the commercial banks to get money at a cheaper rate. The increase in the repo rate will increase the cost of borrowing and lending of the banks which will discourage the public to borrow money and will encourage them to deposit. As the rates are high the availability of credit and demand decreases resulting to decrease in inflation. This increase in repo rate is a symbol of tightening of the policy. More Info
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