30 Sep 2015

50 Base Point Cut By Governor Rajan

On 29th September 2015, RBI Governor Raghuram Rajan announced a 50 bps cut. What does this mean for us?

This is the rate at which banks borrow money. For us it means:

1. Home loans become cheaper. If you have a home loan with a variable interest rate then the interest rate will decrease.

2. This will help keep inflation in check which is always a huge relief for consumers.

3. Fixed deposit interest rate will decrease. The deposits which are currently in place will continue to have the same interest rate. However, if we sign up for an F.D. now, banks will be slashing rates soon.

4. Debt funds will perform better. If you have money in a debt fund, it will give better returns.

Overall, I think this is a welcome step and hope that banks pass on this to the consumers. 

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