The results of the monetary policy review meeting chaired by the RBI Governor Shaktikanta Das are going to come on Thursday. There is a possibility that the central bank may cut the repo rate one more time to speed up the slowing economy. If the Reserve Bank does so, the repo rate will be cut for the sixth consecutive time this year.
However, despite continuous cuts from the RBI, customers are not being benefited by the banks according to their expectations. If the banks implement this correctly then other types of loans including home and auto loans will become much cheaper. In such a situation, the question is why banks are not giving the benefit of the repo rate cut to the customers.
For example, SBI has now increased its margin on new home loans, which is directly impacting your loan and you will have to pay more interest. SBI has increased its margin from 2.25 percent previously to 2.65 percent. Here, tell us that the interest rate levied on the loan by any bank is also included in the margin. Every bank can increase or decrease it accordingly. This is the reason that despite the repo rate being 5.15 percent, the rate of interest is more than 8 percent and the customers do not get the benefit as per the expectation.