RBI cuts repo rate by 0.25 per cent. 5 ways it affects you

1. The Reserve Bank of India today cut the benchmark repo rate by 25 basis points from 6.75 points to 6.50 points, effectively ensuring that the EMIs on home, auto and other loans are set to get lower.

2. The announcement was made by Reserve Bank Governor Raghuram Rajan. This is his first rate cut in over six months. The cash reserve ratio has also been reduced from 95 per cent to 90 per cent, which will be effective from April 16.

3. The reduction in repo rate - which is the rate at which RBI lends short-term funds to lenders - is likely to result in lower loan EMIs. The government has been pitching for lower rates in a bid to boost demand in the economy.

4. The statutory liquidity ratio, or the value of specified securities which commercial banks have to subscribe to, stands at 21.25 per cent, effective April 2 onward.

5. The central bank had last cut its short-term lending rate in September by 50 basis points to 6.75 per cent. Cumulatively, 2015 saw the monetary authority cut the repo rate by 1.25 per cent. Rajan said the growth projection for 2016-17 was being retained at 7.6 per cent.

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