The Reserve Bank of India (RBI) has recently reduced the repo rate by 0.50 percent, which has come down from 6 percent to 5.50 percent. This step of RBI is to promote economic growth and make loans cheaper. But a CA claims that you may have to pay millions of rupees. Let’s understand …
According to Business Today, Chartered Accountant Nitin Kaushik said that despite the rate cuts, many loans taking the same monthly installments (EMI) cannot be seen immediately. He said, ‘People think that their EMI automatically reduces the repo rate, but this does not happen in most cases.’ He said that people have to take measures, otherwise they can lose millions of rupees during their loan period.
Borrowers must understand the impact of repo rate deduction on loans connected to the repo linked lending rate (RLR) or External Benchmark Lending Rate (EBLR). Kaushik said, ‘Repo rate cuts are only beneficial for them, whose loans are connected to repo rate i.e. repo linked lending rate (RLR) or External Benchmark Lending Rate (EBLR) benefits those taking loans. He further said that even then, the benefit himself is not available.
Talk to the bank within 90 days
One of the main reasons for the borrowers not finding their EMI deficiency is that banks usually do not report to customers in advance. Borrowers have a limited period of 90 days to request these benefits. If you miss this period, then you may have to pay more EMIS in the coming years. Kaushik advises people to take time on time to avoid paying more due to lack of information from banks.
What should people do
He said that it is necessary to ensure that your loan is repo-linked or marginal cost of funds based lending rate (MCLR) is based on an old system? If there is an old system then you can consider changing it. Although it can be used between 2 and 5 thousand, but this amount will be recovered in a few months. Kaushik also recommends that you confirm the reset date of your loan and calculate that your EMI is decreasing accordingly.
You can complain to RBI
Even if your interest rate is reduced, then you should confirm this deficiency by sending an email on the subject of ‘RBI Circular 2019 (revised 2024)’ to your bank. If the bank does not do this, then you can complain about it through the RBI’s complaint management system.
Kaushik emphasizes the importance of vigilance of borrowers in view of the reduction in possible interest rates, saying that do not pay more just because your bank forgot to tell you. By taking steps as soon as possible, borrower can take maximum advantage of cut in repo rate and can save considerably during his loan period.
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