BE/RBI NOTE/19/2018

The rate at which RBI lends to Banks is nothing but REPO rate which stands icnreased by 25 basis, as per decision taken in the Monetary Policy Committee meeting held in Mumbai yesterday.  More reports of the increase are as given below:

  1. RBI had raised the rates by 25 Basis Points to 8 per cent in January 2014 which was subsequently reduced by 200 basis points to 6 per cent during the last four years.
  2. With the current increase in the REPO rate, banks would obviously pass on the increase to the customers, and accordingly the Education Loan, Home Loan, Auto Loan and other Loans are likely to become costlier.
  3. Benchmark rate which is otherwise known as MCLR was raised recently many banks, by 10 basis points, which has made the loans costlier.
  4. This rate hike is attributed to the increased global oil prices,.
  5. The RBI Governor reiterted that the increase in the inflation rate including the house hold inflation, wages and increased costs were more than anticipated which prompted an increase in the REPO Rate.
  6. RBI had revised the retail inflation to 4.8-4.9 percent during the first half of 2018-19 and to 4.7 percent in the second half.
  7. RBI has said the Rate hike has been due to the following reasons
    1. Uncertainty in the global financial markets position
    2. Staggered revision of HRA by several states which could result in high inflation
    3. IMD predicts that in the absence of adequate rains, the MSP (Minimum Support Price) on the Khariff cannot be predicted at this stage which again may impact the inflation rate.


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