Hyderabad: The Reserve Bank has recently cut interest rates. The interest rates on loans taken by customers will also fall. However, interest rates on all loans are not reduced.
There are two types of loans offered by banks. One of those is fixed interest rate loans. The second one is floating interest rate loans. The Reserve Bank's decision has no impact on fixed interest rate loans. Only the floating interest type has a rate reduction effect.
How do banks decide interest rates ?
Whenever the Reserve Bank lowers interest rates, it requests banks to transfer that money to consumers. The decision will be taken by the officials of the respective banks. There was no provision for banks to cut interest rates. However, from October 1, banks have been directed to provide loans to retail and small-scale enterprises through an external benchmark.
