Banks may cut auto loan, fixed deposit rates

Mumbai: The Reserve Bank of India (RBI) has kept its key rates unchanged in its mid-quarter monetary policy review on Monday, which means that the EMIs are unlikely to come down soon. The repo rate is unchanged at eight per cent while the reverse repo rate remains at seven per cent.

Only the Cash Reserve Ratio has been cut by 0.25 per cent, which according to the RBI will release Rs 17,000 crore into the banking system. RBI says the government’s recent reform initiatives will result in favourable growth-inflation dynamics, but the main focus will be to control inflation, which is expected to rise to seven per cent by the end of March 2013.

However, some loans may get cheaper. Auto loan rates could come down and banks could also cut fixed deposit rates. But there is unlikely to be any big rate cuts as the RBI is trying to bolster business sentiment.

The CRR has been cut by 0.25 per cent, which according to the RBI will release Rs 17,000 crore into the banking system.

Some of the banks may cut auto loans and home loans by a bit but before that they are likely to bring down deposit rates. The chances of further cut in deposit rates cannot be ruled out.

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