What RBI rate cut means for the borrower, investor, depositor
The cut will immediately benefit borrowers whose loans are linked to repo rate, but not those on MCLR
Depositors to get lower FD rates; debt MF investors may not see NAVs going up like they usually do after a rate cut
The Reserve Bank of India (RBI) on Friday cut policy rates and extended the moratorium period till August to give borrowers facing a cash crunch some respite. But the move may not help all borrowers for three reasons: the cut will immediately benefit only those whose loans are linked to the repo rate, new borrowers may find it difficult to get a loan as banks have tightened lending policies and the moratorium will add to the cost of the loan in the long term. Depositors will suffer and so will debt mutual fund investors as long-dated funds may not gain the way they normally do after a rate cut, and short-term funds will see their returns fall.