"My name is Raghuram Rajan and I do what I do" this is how Mr Responded to a comment that he was being Santa Claus in cutting interest rate by more than expected. We could see the Santa Claus impact on the monetary policy when it was announced.
The Monetary Policy announced by Reserve Bank of India Governor Raghuram Rajan on 29th September 2015 have started seeing reactions from the major lending banks in India.
The Key highlights of the Monetary Policy for a Home Loan Borrowers are as follows:
The Repo Rate reduced from 7.25% to 6.75% .
The central bank also proposed to reduce the risk weights on affordable housing applicable to lower value on well collateralize individual housing loans.At present the minimum risk weight applicable on individual housing loan is 50 percent.
The central bank also proposed to reduce the risk weights on affordable housing applicable to lower value on well collateralize individual housing loans.At present the minimum risk weight applicable on individual housing loan is 50 percent.
The RBI has reduced official rates by 1.25 bps since January .075 bps in January 2015 and 50 bps now , in the last policy announcement the lending banks have not passed the complete benefits to the customers due to other factors but this time around the RBI is quite hopeful the major part of this rate will be passed on to the borrowers.
Soon after the announcement of the Repo Rate Cut, State Bank of India announced at cut of 0.40% basis point reduction on all Loans be it Home Loan or Auto Loans. The Banks has decided to reduce the lending rate to 9.3% with effect from October 5 , 2015. The swift action by SBI has put onus on other Banks in the market to follow the suit. I am also enclosing the detailed interview of SBI Chairman Arundhati Bhattacharya for the benefit of the readers in which she is explaining how the whole process will work from here on.
In an interview yesterday , the MD of ICICI Bank Mrs Chanda Kochhar has maintained that more than half of this 0.50 bps cut will be passed on to the borrowers. The official announcement to this effect will be made once banks reviews the policy in detail.
Mr Aditya Puri HDFC Bank Managing Director have hinted that the most banks will cut their lending rates by end of this week. On his bank strategy on reducing rate , he stated that the asset liability committee will take a final decision on that.
RBI has given Diwali gift to the Borrowers in India and all borrowers of Housing Loan/Auto Loan/Personal Loan are sure to benefit from this move. The swift decision by SBI to reduce the rate by .40 bps have now put pressure on other major lender ICICI Bank and HDFC to reduce the rate at the earliest. SBI's .40 bps reduction will come into effect from 5th October 2015.
Now the question remains how this cut in rates will impact the existing home loan borrowers. These rates will be applicable to the new home loan customers right now and as far as the existing home loan borrowers are concerned , what quantum of benefits will be passed to them, it will only become clear once these policy decisions are taken by the individual banks.
But all in all it is a good move by the central bank and we expect to also see lot of action on affordable housing front, once the risk weight-age of 50 percent is done with.
Mr Aditya Puri HDFC Bank Managing Director have hinted that the most banks will cut their lending rates by end of this week. On his bank strategy on reducing rate , he stated that the asset liability committee will take a final decision on that.
RBI has given Diwali gift to the Borrowers in India and all borrowers of Housing Loan/Auto Loan/Personal Loan are sure to benefit from this move. The swift decision by SBI to reduce the rate by .40 bps have now put pressure on other major lender ICICI Bank and HDFC to reduce the rate at the earliest. SBI's .40 bps reduction will come into effect from 5th October 2015.
Now the question remains how this cut in rates will impact the existing home loan borrowers. These rates will be applicable to the new home loan customers right now and as far as the existing home loan borrowers are concerned , what quantum of benefits will be passed to them, it will only become clear once these policy decisions are taken by the individual banks.
But all in all it is a good move by the central bank and we expect to also see lot of action on affordable housing front, once the risk weight-age of 50 percent is done with.
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