TNI Bureau: In a huge relief to the millions of home buyers in India, the Reserve Bank of India (RBI) has reduced the repo rate and CRR (Cash Reserve Ratio) by 25 basis points each. As a result, the home loans will become cheaper and the banks will be forced to slash the EMI. This is the first time in nine months the RBI has slashed the rates.
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The Repo rate will become 7.75% with immediate effect. The CRR will become 4% from February 9, 2013. The RBI believes that the CRR cut will infuse Rs 18,000 crore into the system.
Repo rate is the rate at which the RBI lends money to all banks. The banks will have to reduce the loan rates, as they will avail benefits from the RBI, thanks to the cut in repo rate.