RBI Brings Cheers To People With Steep Rate Cut

Hyderabad:The Reserve Bank of India’s decision to increase the Loan-to-Value (LTV) ratio for gold loans to 85 per cent, and cut the repo rate by 50 basis points, has brought relief to many borrowers across Telangana. People said that the new regulations will pave the way for people to take gold loans and housing loans due to the reduced lending rates.

In the new regulations, the central bank said it will raise the LTV ratio to 85 per cent from the existing 75 per cent for gold loans of up to Rs 2.5 lakh per borrower, including interest. Previously, if a person wanted to take a gold loan of Rs 1 lakh, they would only get a loan worth Rs 75,000. But with the changes, the person can avail a loan worth Rs 85,000.

Along with the gold loan regulations, housing loans have received a major cut. A 50 basis point (bps) cut in RBI repo rate will translate into a lower home loan rate and as a result lower EMIs.

Ravi Teja, a resident of Kukatpally who works as a private employee, said: “I have always wanted to own a house, but I was hesitant to look for housing loans because it is very costly. But this move from RBI might reduce the EMI costs by at least `3,000-`4,000. I might actually consider a loan after banks reduce the costs.”

Swapna A., a homemaker from Malakpet, said: “My daughter just completed her intermediate, and I was looking for a gold loan for her education. Now that banks have increased the gold loan ratio to 85 per cent, I can manage without putting more of my jewellery in the bank.”

Suresh Reddy, a senior bank manager in Hyderabad, said: “This is a practical decision by the RBI. By increasing the LTV ratio and reducing the repo rate, more people will be encouraged to borrow, and they’ll find it easier to repay. It also boosts confidence in the banking system. The move will benefit both lenders and borrowers.”