Banks to pass-on Repo Rate cut benefits to customers: FM; EMIs, Auto loans to become cheaper

New Delhi, Aug 23: Finance Minister Nirmala Sitharaman on Friday said the benefits of the Repo Rate cuts were not getting passed on to the custormers. She said that banks have now agreed to pass on interest rate cuts through the MCLR reduction announced by the monetary policy committee to the borrowers.

"People were saying that the benefit of rate reductions don't reach them at all, or reaches in trickle. There was an across the board grievance, " Finance Minister said.

"The banks have now decided to pass on any rate cut through MCLR reduction to benefit all borrowers. This will result in reduced EMIs for housing loans, vehicles and other retail loans, by directly linking repo rates to the interest rates," Nirmala Sitharaman said.

Banks have also decided to launch repo rate-linked loan products, the finance Minister stated. Banks have also decided to launch repo-rate linked products, said Finance Minister Nirmala Sitharaman.

Banks will issue a one-time settlement policy to benefit small enterprises and retail borrowers to settle their loan overdues.

"This would be done through check box approach and not remain pending for approval."

Nirmala Sitharaman also said that the RBI discussed that the aim is to reduce the interest rate on housing and the auto rate.