Good News For Borrowers As FM Sitharaman Pushes Banks To Pass Repo Rate Cut Faster

Amid concerns over the ongoing economic slowdown in the country, Finance Minister Nirmala Sitharaman on Friday address a press conference to announce a slew of measures taken by the government in an attempt to give a fillip to the economy.

Sitharaman said that after consultation, banks have agreed to repo rate or external benchmarking linked products. (File Photo/ Getty)

New Delhi: Amid concerns over the ongoing economic slowdown in the country, Finance Minister Nirmala Sitharaman on Friday address a press conference to announce a slew of measures taken by the government in an attempt to give a fillip to the economy. Speaking at the National Media Centre in New Delhi, Finance Minister said that the banks should be more reasonable in passing the interest rate to the end customers. Sithraman said that it has come into government's notice that rate cut benefits given by the Reserve Bank of India (RBI) is not reaching to customers and it has been one common grievance across various sectors. Sitharaman said that after consultation, banks have agreed to repo rate or external benchmarking linked products. "Today's environment demands that the banks be more reasonable with this. EMIs will be reduced for housing loans, vehicle loans and other retail loans by directly linking the interest rate to the repo rate," said Sitharaman. Addressing the media here, Finance Minister Nirmala Sitharaman also said that banks will pass on RBI rate cut benefits to borrowers through MCLR reduction. She said that banks will launch repo rate and external benchmark-linked loan products that will lead to reduced easy monthly installments for housing, vehicle and other retail loans. The minister also announced additional liquidity support of Rs 20,000 crore to housing finance companies (HFCs) by the National Housing Bank (NHB), thereby increasing the total support to Rs 30,000 crore. The government announced partial credit scheme for purchase of pooled assets of non-banking finance companies and HFCs up to Rs 1 lakh crore to be monitored at highest level in each bank.  Prepayment notices issued to NBFCs will be monitored by banks. The minister said that NBFCs will be permitted to use the Aadhaar authenticated bank 'Know Your Customer' (KYC) to avoid repeated processes. The government has decided to make necessary changes in PMLA rules and Aadhaar regulations to ease the lending process. "Working capital loans for industry will also become cheaper," Sitharaman said. To reduce harassment and bring in greater efficiency, public sector banks (PSBs) will ensure mandated return of loan documents within 15 days of loan closure. "This will benefit borrowers who have mortgaged assets," she said.