Expected Effects of Rate Cut:
- Loan rates would come down and already banks have started cutting lending rates.
- However, lending rate cuts are smaller than the reduction in repo rate
- The Reserve Bank of India (RBI) has given priority sector tag to bank loans extended to registered non-bank lenders for financing agriculture, small businesses and home buyers within specified limits.
- The cut in repo rate is likely to result in lower EMIs for home and auto buyers.
- RBI’s next monetary policy statement will come out on October 4.