The Reserve Bank of India (RBI) Monetary Policy Committee is set to meet from June 5 to June 7 to review the repo rate. Analysts expect that considering both global and domestic factors along with the current inflation outlook, the RBI is likely to keep interest rates unchanged.
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The RBI wants to take a cautious stance and is unlikely to reduce interest rates any time soon unless domestic inflation aligns with its target of 4%. Additionally, due to the interconnectedness of global financial markets, the RBI has been coordinating its actions with those of major central banks. Notably, the US Federal Reserve has not indicated any move towards rate cuts and continues to uphold a ‘higher for longer’ interest rate policy to control inflation.
The general expectation is that most central banks in Asia will delay cutting rates. Specifically, we don’t expect the RBI to cut rates before the Fed pivots, which may not be until later in the year or at all in 2024.
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In light of this, loan rates linked to the repo rate are projected to remain stable, with little chance of a decrease in this quarter. Similarly, fixed deposit (FD) rates are expected to stay relatively steady without significant fluctuations during this period.
Borrowers have been eagerly waiting for a reduction in key interest rates. Since the series of rate hikes that began in May 2022, home loan EMIs and loan tenures have increased significantly. To manage their growing debt, existing borrowers should consider switching their loans to lower rates or try to prepay 5% of their loan balance annually. For those looking to refinance at a lower rate, the table below lists 10 banks offering the lowest interest rates.
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| Bank Name | Interest Rate Range For Home Loans Under Rs. 30 Lakh (% p.a.) |
| RBL Bank | 8.20-14.75 |
| UCO Bank | 8.30-10.00 |
| Central Bank | 8.35-9.50 |
| Union Bank of India | 8.35-10.75 |
| Indian Overseas Bank | >=8.40 |
| Indian Bank | 8.40-9.80 |
| Bank of Baroda | 8.40-10.60 |
| Bank of India | 8.40-10.85 |
| Punjab National Bank | 8.45-10.10 |
| IDBI Bank | 8.45-12.25 |
Disclaimer: Interest rates that vary with tenures or credit scores within the specified loan amount are indicated as a range. Data taken from respective bank’s websites on May 31, 2024.
