In a welcome development for borrowers, the RBI's latest monetary policy brings good news. While the central bank kept the repo rate unchanged, it decided to reduce the Cash Reserve Ratio (CRR) that banks must maintain. This move will free up more funds for banks to lend.
With more liquidity available, we anticipate that banks may pass on some of the benefits to borrowers through lower interest rates. A reduction in interest rates will particularly benefit high-ticket borrowers, such as those taking home loans, by reducing EMIs. We believe this shift could prompt home buyers who have been waiting on the sidelines to finally make their purchase decisions.
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