RBI Increases Repo Rate In Festive Season

The Reserve Bank of India on September 30, 2022, increased the repo rate, by 50 basis points. With the hike, the repo rate now stands at 5.90%.

Various polls conducted by policy think-tanks predicted the banking regulator to increase the repo rate, at which the RBI lends funds to scheduled banks in India, by up to 50 basis points in order to tame alarmingly high inflation and a consistent depreciation of the India rupee- which has been hovering above the 80-mark against the Us dollar.

The six-member MPC is expected to continue with the rate hike in at least two upcoming cycles since restoring rupee stability would require maintaining a restrictive policy stance for the time being.

Home loans to get costlier

The rate hike by the RBI would prompt banks in India to increase home loan interest rates at a time when sales activity is likely to be intense with the kicking off of the festive season on September 26, with the start of the Navratra festival.

As it is, banks in India are offering home loans at over 7% interest after the RBI increased the benchmark lending rate by 140 basis points, forcing banks transfer the burden on borrowers.