RBI repo rate cut: Your home and car loan EMIs may not come down soon

NEW DELHI: Your home and car loan EMIs may not come down anytime soon! Even with the Reserve Bank of India ( RBI) obliging with a 25 basis points repo rate cut, banks are unlikely to pass on the benefit to its customers.

State Bank of India ( SBI) chairman Pratip Chaudhuri has said that there is no scope of transmitting the central bank's repo rate cut. "Repo rate cut will have no impact on loan, deposit rates," he said.

Echoing the same opiion IDBI Bank told ET Now that it is unlikely to pass on rate cut advantage to customers. "Unless banks can reduce desposit rates a lending rate cut is difficult," the bank said.

RBI in its mid-quarter monetary policy review on Tuesday cut the repo rate by 25 basis points to 7.5% for the second time since the start of the year in a bid to help revive flagging growth in Asia's third-largest economy, but warned that its scope for further policy easing is limited.

Subbarao acknowledged that there is limited headroom to ease monetary policy going forward. The government has a key role in pushing growth, the central bank said.

Commenting on RBI's move PMEAC Chairman C Rangarajan said, RBI's policy is a move in the right direction. "Everyone expected the rate cut, non-food manufacturing inflation has been brought down," he added.

However, a recent uptick in headline wholesale inflation, rising food price-driven consumer inflation and a record-high current account deficit limit the RBI's space for more aggressive monetary easing.

"Even as the policy stance emphasis addressing the growth risks, the headline for further monetary easing remains quite limited," the RBI said in its statement.