Interest rates and borrowers relationship

In a very simple way let's say that higher interest rate will lead to expensive borrowing while lowering of rates will help borrowers to get money and spend.
RBI may possibly announce rate cut in April so borrowers can plan for property buy, cars and appliances at lower interest rates.
There will be then significant reduction in EMIs for existing borrowers as well. For every reduction of 25 basis points in the repo rate a borrowers EMI goes down by Rs 16-18 per lakh for a tenure of 20 years. For example if your loan amount is say Rs 30 lakh for 20 years them EMI will be Rs 50o less per month ( Don't take loans unless necessary)

Cut the flab to stay financially fit this year

Today there is just too much of financial flotsam that just a passbook and a notebook is not enough to keep check on your investments. Its time to clean up the financial wardrobe
Let's see how
1. Its wise to to not to have more than two bank accounts. Choose bank with a wider reach so that you don't have to change one when you Re relocating or changing job.
2. Asset Allocation:
# review portfolio every year
# check under performers and schemes with high expenses and low returns
# don't go for more than 8-10 funds
# avoid new funds
3. Keep only two cards.
# go for EMI options to pay delayed outstanding
# close the card with a high interest rates
4. Do not invest in more than three or four policies . ideally go for policies that can vè closed after certain no of years.
5. Use you hindsight while investing in stock market. Don't follow the tide. It takes a lot of time for money to grow even in the markets.
6. The Loan portion ideally should not exceed 40% of your monthly pay.
Lastly Play wise for a Happy New Year :)

What RBI has done?
The RBI raised the reverse repo by 100 basis points to 7% and marginal standing facility (MSF) rate to 9% maintaing a 200 basis point corridor with the repo bang in the middle.The banks set the benchmark interest rate by 50 basis points to 8%. The hike is much sharper than the expected 25 basis points. In 16 months the RBI has raised rates by 325 basis points. the RBI is hoping that it will put a lid on inflation by moderating demand but concedes that the strategy may not work effectively unless appropriate action is taken to deal with supply bottlenecks. Uncertainty over crude oil prices, foreign capital flows, food prices, the vagaries of monsoon, a rising subsidy bill and recent tax cuts on petro products will ensure inflation will remain elevated at least during the second quarter which ends on Sept 30.
Result: The EMIs of home or auto loan will automatically go up immediately.
For industrialist, cost of borrowings will go up leading to project delays.
For depositors, its a profit news as will earn more interest.

The Central Bank of India feels India is not in a slowdown mode and believes a little bit of growth can be sacrificed to deal with imperative of tackling inflation.
( repo is the rate at which the central bank provides short term cash to banks)

This news is so big that it made many like us to make many calls to our bankers, brokers, and accountants. This repo factor has changed the view of investment for sure specially for my kinda middle class investors & savers.