Car & Bike EMI To Increase Very Soon – RBI Hikes Repo Rate

Car and bike sales have been steadily increasing in India post the Coronavirus pandemic, and automobile companies are launching newer vehicles to capitalise on this growth.

That being said, the latest decision by The Reserve Bank of India (RBI) could potentially curb this growth and this reduced growth in the Indian automobile industry could affect other connected industries as well.

That being said, the latest decision from RBI to increase the repo rate by 35 basis points to 6.25 per cent has all the potential to directly impact the country's growth along with an increase in unemployment if the industry growth dips below a certain point.

With this decision to increase the repo rate by 25 basis points could push the banks to increase the EMI payable on cars and bikes by a well-noticeable amount. Moreover, it is not only the car and bike loans that could potentially go up, but other EMIs as well.

According to numerous reports, the Reserve Bank of India has taken this decision to hike repo rates to tame the rising global economic concerns. Moreover, the decision to hike the interest rate was taken on the assessment done in the Monetary Policy Committee meeting.

Earlier, the Reserve Bank of India had increased the repo rate by a massive 40 basis points to 4.4 per cent back in May 2022. Later, the repo rate was further increased to 4.90 per cent as the RBI increased yet another 50 basis points. Most recently, the repo rate was again increased by another 50 points to 5.4 per cent.

That being said, we can expect a slight dip in the overall sales figures in the Indian automotive market if the banks increase the EMI amount on car loans and bike loans. Moreover, this will have a profound effect on the recovery of the Indian automobile segment, even though it is for a shorter time period.

Thoughts About The RBIs Decision To Increase Repo Rates

Though we can expect a marginal dip in overall sales figures, we expect the Indian automobile market to soon bounce back even stronger despite the increased EMI on car and bike loans. Also, RBI could have waited a bit longer to roll out its decision regarding the increase in repo rates.

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Article Published On: Wednesday, December 7, 2022, 16:43 [IST]
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