The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points (100 basis points is equal to one per cent) to a six-year low of 6.25 per cent.
This can be good news for borrowers as banks are expected to reduce the lending rates. But this could also mean that your fixed deposit rates might go down further.
Ashutosh Khajaria, Executive Director, The Federal Bank Ltd, says, "To bring down their marginal cost of lending rate (MCLR), banks have to first cut their cost of deposit. It won't be possible for banks to bring material changes in lending rates without cutting the cost of deposit."
