BENGALURU: Raghuram Rajan, the governor of Reserve Bank India, announced a surprise for both the ordinary and business houses. Rajan’s new proposal detailing RBI to cut repo rate by 25 basis points citing improved combined fiscal deficit has been a great news bringing smiles on every ones face.

The rate cut was the effect of the Finance Minister Arun Jaitley’s pledge to exercise responsibility in the outflows. The reason behind the cut of revenue growth has led to higher revenues to the states and perhaps, this step of the government has convinced the RBI governor to make such a decision.

The Times Of India has decoded certain ways how the RBI rate cut will impact you. According to TOI, RBI’s decision for a repo rate cut with 25 basis points from 8 percent to 7.75 percent will help banks to bring down EMIs. This will allow the rates cuts in home loan by 842 on an 50 lakh loan on tenure of twenty years.

With Raghuram Rajan’s declaration for rate cuts, the sensex and nifty has seen drastic improvements by hitting high points in the opening trade. This move of RBI will lead banks to banks to gain as the bond portfolio values will also get increase with the impact of the rate cuts.

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