The Reserve Bank of India (RBI) has left the benchmark interest rate unchanged at a record low at 4% while maintaining an accommodative stance in the wake of the second wave of the coronavirus pandemic. The status quo has been unbroken for the seventh consecutive time; the repo rate was reduced in May 2020.

The reverse repo rate is also kept unchanged at 3.35%. RBI Governor Shaktikanta Das made the announcement on key rates on Friday, after the monetary policy committee (MPC) concluded its three-day meeting on 4 June.

Borrowers will have much to cheer as banks are unlikely to increase interest rates on loans with repo rates continuing to be at the lowest levels since two decades. The repo rate is used by most banks as the benchmark for the loans.

Home loan borrowers usually have loans spread over a longer period. While new home buyers stand to automatically gain from a low interest rate regime, those servicing old loans can shift to an external benchmark linked loan if they have not yet moved to it. They can also switch their loan to a new lender.

Auto loans are usually given under a fixed interest rate, between 5-7 years. They can gain from this low interest rate period.

Fixed depositors will lose out due to the current low interest rates on them, which have prevailed for the past almost two years.