As the repo rate has decreased, banks will be able to borrow money from the RBI at a lower cost, and this advantage is expected to be passed on to customers. Most bank loans, such as personal, home, car, MSME loans, and other retail floating rate loans, have interest rates that are tied to an external benchmark linked rate (EBRL). The RBI's repo rate serves as an EBRL, so the reduction will directly lead to lower interest rates on many bank loans.
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