The car industry is already facing a credit crunch. Now, Car loans have become costlier. Earlier, the banks had raised interest rates by 75 basis points, after the RBI increased the Cash Reserve Ratio (CRR). Again, the RBI has raised the repo rate (the rate at which RBI lends to banks) by 25 basis points. This has added pressure on the banks to hike interest rates on loans.
This move will affect the whole of the banking sector as well as the car industry. However, the apex bank has resorted to this hike to control inflation in the country.
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