The common man might have to face another round of increase in home and automobile loan EMIs as the Reserve Bank of India (RBI) hiked lending rates to banks on Tuesday. In a move that surprised everyone, the RBI increased repo rates by 25 basis points or 0.25 per cent to 8 per cent. The central bank also paid no attention to banks’ demand to reduce cash reserve ratio (CRR) and retained it at 4 per cent.
While most of analysts, domestic and global, were expecting the RBI to at least maintain status quo, Reserve Bank Governor Raghuram Rajan did the unexpected again. Though the central bank justified its decision with an aim to reducing inflation, experts stressed that the RBI decision might result in banks hiking EMIs for home and automobile loans. So, even if inflation comes down in coming months, public will still remain under immense pressure, experts added.
While industry expressed disappointment, bankers said they will take a view on raising interest rates depending on demand for credit and other factors. The policy rates have been hiked thrice, by 0.25 per cent each, since Rajan took over as Governor in September, 2013.