With the reduction in their respective benchmark lending rates, home, auto and other loans have become cheaper.
RBI will continue accommodative stance as long as it is necessary and growth revives, said RBI Gov Shaktikanta Das.
The repo rate has been brought down to 5.15 per cent to help reduce borrowing costs for home and auto loans.
Floating rate loans are re-set as when the interest rates fall or rise, but fixed rate loans are reset in 9-12 months.
The move is expected to generate an additional lending and liquidity in the financial system of upto Rs 5 lakh crore, said FM.
Working capital loans for industry will also become cheaper, FM Nirmala Sitharaman said.
Additional income tax deduction of Rs 1.5 lakh on home loans for houses under Rs 45 lakh announced in Budget 2019.
Government will also provide income tax deduction of Rs 1.5 lakh on interest paid on loans for purchase of electric vehicles.
In first week of June RBI had lowered the repo rate to 5.75 per cent.
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