<p>Union Finance Minister Nirmala Sitharaman will be presenting the Interim Budget for the FY2024-25 in the Parliament on February 1. While this will be an Interim or vote-on-accounts budget, the new government after the 2024 Lok Sabha elections will be present the full Budget.</p><p>The interim budget will however still present the revised estimates for FY24 and allocate Budget estimates for FY25 in the context of India's earnings and expenditures.</p><p>In this context, let us take a quick look at how the repo rate affects your loans:</p><p><strong>What is repo rate?</strong></p><p>Simply put, repo rate (repurchasing option rate) is the rate of interest a central bank of a country charges from commercial banks when it lends funds to the latter.</p><p>The rate is used by financial authorities to keep a check on inflation in the country.</p>.Union Budget 2024 | How much the Modi government has spent on health over the past decade.<p>When a country goes through inflation, the central bank hikes the repo rate, which results in commercial banks borrowing lesser money. This reduces liquidity in the economy, thus keeping a check on inflation.</p><p>India’s retail inflation, measured by the consumer price index (CPI), had surged to 5.55 per cent in November from 4.87 per cent in October 2023. However, the RBI, as of now, has kept the repo rate unchanged at 6.50 per cent. It had last increased the repo rate, from 6.25 per cent to the current 6.50 per cent, on February 8, 2023.<br></p><p><strong>What is reverse repo rate?</strong></p><p>When the central bank of a country needs money and borrows the same from a commerical bank, it pays the latter a certain interest which is generally lower than the repo rate. </p><p>While repo rate is used to control liquidity, the reverse repo rate is instead used for keeping a check on the cash flow. The current reverse repo rate is at 3.35%</p><p><strong>How does repo rate affect your loans?</strong></p><p>When the apex bank, the Reserve Bank of India in this case, makes any change in its repo rates, commercial banks also change their rates of interest for customers.</p><p>EMIs for home loan and other personal loans are likely to increase when the RBI increases its repo rate.</p><p>However, as per the central bank's directive, commercial banks also have to bring down their rates of interest and pass on the benefit to customers when RBI slashes the repo rate.</p>
<p>Union Finance Minister Nirmala Sitharaman will be presenting the Interim Budget for the FY2024-25 in the Parliament on February 1. While this will be an Interim or vote-on-accounts budget, the new government after the 2024 Lok Sabha elections will be present the full Budget.</p><p>The interim budget will however still present the revised estimates for FY24 and allocate Budget estimates for FY25 in the context of India's earnings and expenditures.</p><p>In this context, let us take a quick look at how the repo rate affects your loans:</p><p><strong>What is repo rate?</strong></p><p>Simply put, repo rate (repurchasing option rate) is the rate of interest a central bank of a country charges from commercial banks when it lends funds to the latter.</p><p>The rate is used by financial authorities to keep a check on inflation in the country.</p>.Union Budget 2024 | How much the Modi government has spent on health over the past decade.<p>When a country goes through inflation, the central bank hikes the repo rate, which results in commercial banks borrowing lesser money. This reduces liquidity in the economy, thus keeping a check on inflation.</p><p>India’s retail inflation, measured by the consumer price index (CPI), had surged to 5.55 per cent in November from 4.87 per cent in October 2023. However, the RBI, as of now, has kept the repo rate unchanged at 6.50 per cent. It had last increased the repo rate, from 6.25 per cent to the current 6.50 per cent, on February 8, 2023.<br></p><p><strong>What is reverse repo rate?</strong></p><p>When the central bank of a country needs money and borrows the same from a commerical bank, it pays the latter a certain interest which is generally lower than the repo rate. </p><p>While repo rate is used to control liquidity, the reverse repo rate is instead used for keeping a check on the cash flow. The current reverse repo rate is at 3.35%</p><p><strong>How does repo rate affect your loans?</strong></p><p>When the apex bank, the Reserve Bank of India in this case, makes any change in its repo rates, commercial banks also change their rates of interest for customers.</p><p>EMIs for home loan and other personal loans are likely to increase when the RBI increases its repo rate.</p><p>However, as per the central bank's directive, commercial banks also have to bring down their rates of interest and pass on the benefit to customers when RBI slashes the repo rate.</p>
