In a bid to boostdemand and growth, the RBI's Monetary Policy Committee (MPC) on Wednesdayannounced 35 bps cut in repo rate, which eventually is expected to betransmitted to retail loans. However, a look at the recent past shows that ratecuts by the central bank are transmitted further to the end-consumer in aproportionate manner.Prior to the latest cut of 35 basis points (bps) in reporate the MPC had already reduced it by 75 bps since February 2019. But,according to Reserve Bank Governor Shaktikanta Das, bank rates have declined byonly 29 bps so far."The weighted average call money rate WACR has declinedby 78 bps, market repo rate has come down by 73 bps....banks on the other handhave reduced their interest rates on fresh rupee loans by only 29 basis pointsso far, during February to June," Das told reporters here after themonetary policy meet.He, however, added that the consultation with both privateand public sector banks indicated that they are taking steps to lower interestrates in a progressive manner.

Since April 2016,all loans sanctioned by banks including car and home loans are linked to thebank's marginal cost of funds based lending rate (MCLR). A lower MCLReffectively means a lower interest rate and reduction in bank's MCLR benefitsall car loan and home loans borrowers.Market players too hope that banks wouldin a swift manner transmit the rate cuts.

Umesh Revankar,MD and CEO of Shriram Transport Finance, said: "We welcome the RBI's decisionof 35 bps cut. This rate cut is in line with our expectations in currenteconomic conditions. With a total of 110 bps cut in 2019, we expect the banksto be in a comfortable position to do the transmission of the same.

"As theeconomy is going through a downturn, largely on account of falling demand andconsumption, the latest repo rate cut to 5.40 per cent, is expected to boostsentiments. But it would only happen once consumers get the ultimate reliefwith lower rates."For a common man, a middle-class consumer, a house and acar are among the most dreamt possessions in life, and these two amenities areat the heart of the banks' lending business.Amit Modi, Director, ABA Corp said:"Rather than making sure that consumers are offered reduced interest rateson home loans which will result in lower EMIs, there is still an ongoingtendency of cushioning the bottom lines by the banks, which ultimately turnsout to be counterproductive to the move itself. "The Monetary PolicyCommittee has once again maintained an accommodative stance. We hope that thebanks are also more accommodative in their stance towards the home buyersaspirations."

In another majordevelopment, country's largest bank State Bank of India (SBI) cut its benchmarklending rates by 15 basis points across all tenors, shortly after the centralbank slashed interest rates by a larger-than-expected 35 bps to boost theeconomy in a solidarity to support growth.It is expected that other banks toowould follow suit and the consumers would take a sigh of relief.