Raghuram Rajan, the Governor of the Reserve Bank of India, on Tuesday stated that there was a bench mark or repo rate hike of 25 base points (.25 percent) which was expected. The move of the RBI may result on banks increasing the interest rates on loans; this will also lead to an increased EMI (equated monthly installments) for both the home loans which are existing as well as for new retail loan which are going to be sanctioned for the new customers.
An economist at DBS, Radhika Roa in a statement to Reuters told that this particular move is a follow through the September's approach direction as high and persistent inflation is seen as a hindrance to the medium-term development standpoint. She stated that the new arrangement approach is a determined center to hold inflationary desires, with or without backing from financial arrangement.
CII's Chief General, Chandrajit Banerjee, said raising investment rate might harm development while demonstrating unequal to the errand of handling expansion. The rate at which banks receive short term money from RBI raised to 7.75, after the rise of repo rates.