COVID-19 impact: What RBI's emergency rate cut means for your loans, fixed deposit investors

COVID-19 impact: What RBI's emergency rate cut means for your loans, fixed deposit investorsCOVID-19 impact: What RBI's emergency rate cut means for your loans, fixed deposit investors

To calm the nerves of a stock market gripped by bears and to help liquidity conditions in the economy, the Reserve Bank of India (RBI) governor, Shaktikanta Das cut key policy rates on Friday. This rate cut intervention by RBI has come after central banks across the world announced rate cuts to stave off a coronavirus-related recession.Although this might soothe the nerves of equity investors and reduce EMIs for borrowers, this is just more bad news for fixed deposit (FD) investors.The RBI, today, cut the repo rate and reserve repo rate by 75 basis points and 90 bps, respectively (100 basis points/bps = 1 per cent). The repo rate now stands at 4.4 per cent and reserve repo rate at 4 per cent. The apex bank last cut rates in its October 2019 monetary policy review. This monetary policy review of the RBI was rescheduled in wake of pandemic which originally scheduled to take place on March 31, 2020 and April 3, 2020.Here is a look at how today's rate cut will impact fixed deposit (FD) investors and borrowers, both existing and new.The latest rate cut is likely to cause more heart ache for FD investors, especially senior citizens who are dependent on interest income. Despite RBI keeping key rates unchanged since December 2019, major banks have continued cutting interest rates on fixed deposits. The country's largest bank, State Bank of India (SBI), has reduced fixed deposit rates back-to-back in February and March.According to a Times of ...
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