What is CRR, SLR, Repo Rate & Reverse Repo Rate and their linkage with Home Loan Rate?

The article is authored by Square Capital research team. Square Capital  is India's first unbiased loan advisor for best deals on all types of loans and is known for its unmatched advisory services. It is the mortgage arm of Square Capital - India's largest real estate transactions company.

(A term called as  "Basis Points" is often used in monetary policy reviews. What is Basis Point? …. 1% is equivalent to 100 basis points.e.g. If Repo Rate is 7.75% and RBI increases it by 25 basis point, then new rate will be 8% as 25 basis point will be equal to 0.25%)

Here are some points on 'how the RBI's rate cuts impact homeloans-

• The RBI's rate cuts does not necessarily mean that the borrowers benefit immediately. The landing bank has to reduce its Base Lending rate for EMI to decrease.
• These rate cuts will not have any impact on fixed rate home loans or fixed rate consumer loans. The rate of interest is fixed with respect to fixed loans.
• The existing bank customers (who have taken loans) can see either their Loan tenures or EMIs coming down. By default the banks reduce the loan tenure instead of loan EMI. That means your monthly EMI installment amount remains the same. The rate cut will make a substantial difference if the remaining loan term/tenure is very long.