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Synopsis
With repo rate being at the lowest level seen in the last two decades, a continuation of this low interest rate regime works well for the borrowers, however, for FD investors it will only increase their woes.
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The Reserve Bank of India (RBI), in its latest bi-monthly monetary meet held on April 7, 2021, has decided to keep the repo rate unchanged yet again. This is the sixth time in a row the apex bank has kept the key rates unchanged.
The repo rate and reverse rate remain at 4% and 3.35%, respectively, after the announcement. No change in the repo rate was expected as the central bank is expected to tame the yields of government securities due to higher borrowings planned by the government in FY 2021-22.
Time to keep it safe and flexible
Maulik Madhu
BL Research Bureau |
Updated on
January 02, 2021
× In its efforts to spur economic growth following the Covid-19 pandemic, the RBI announced a sharp 75-basis point (bps) cut in the repo rate in March 2020, followed by another 40-bps cut in May. With this, the repo rate has come down from 5.15 per cent at the start of the year to 4 per cent now.
In line with this move, large commercial banks slashed their deposit rates by 70-160 bps over the past year or so. Small finance banks (SFBs) followed suit with cuts of 100-150 bps.
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