India’s central bank, the Reserve Bank of India (RBI), on Wednesday raised the repo rate by 50 basis points to 4.90.
This would lead to various types of loans getting dearer in the country.
The repo rate is the rate at which the central bank of a country lends money to commercial banks in the event of a shortfall of funds.
It is mainly used by monetary authorities to control inflation in a country.
RBI Governor Shaktikanta Das announced the hike in repo rate after three-day deliberations by the Monetary Policy Committee (MPC).
In May, the MPC raised the repo rate by 40 basis points.
As a result, home loans, vehicle loans, personal loans are set to become dearer, as commercial banks would charge more interest from the borrowers.
The rate of inflation touched an eight-year high of 7.79 per cent in April, even as the wholesale price-based inflation remained in double digits for 13 months and touched a record high of 15.08 per cent.
Inflation is rising mainly on account of surging commodity prices, including fuel.
Xinhua/NAN
