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RBI cuts repo rate by 35 basis points to 5.40%; loans to get cheaper

File photo. Photograph:( Reuters )

WION Web Team New Delhi Aug 07, 2019, 11.56 AM (IST)

The Reserve Bank of India (RBI) cut repo rate by 35 basis points to 5.40 per cent on Wednesday.

Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers on loans, and lowers equal monthly instalments on home loans, car loans and personal loans. 

The current cut in rates would mean loans would get cheaper.

India's central bank adjusted the country's GDP projection to 6.9 per cent for the current fiscal year from the earlier projection of 7 per cent.

The RBI said in a statement that the cut would help "address growth concerns by boosting aggregate demand" and target private investment as a "priority".

In June, the RBI had cut the repo rate by 0.25 per cent while also cutting down India's GDP growth forecast for FY20 from 7.2 per cent to 7 per cent.