MUMBAI: Home loans and other loans to individuals and businesses are set to become cheaper with Reserve Bank of India releasing Rs 32,000 crore to banks through a half percentage point cut in the cash reserve ratio (CRR) on Tuesday, a step which is also aimed at driving growth.

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The CRR, which is the level of deposits that banks have to mandatorily maintain with RBI, was reduced to 5.5% from 6%. This marks RBI's first reduction in CRR since January 2009 when it had released funds to stimulate demand in the wake of the Lehman Brothers crisis. Bankers that TOI spoke to said that interest rates are headed down and it was a matter of time before lending rates also dip. Pratip Chaudhuri, chairman of the country's largest lender State Bank of India said that interest rates will come down on loans to certain sectors where there is good growth and low delinquencies. However, banks might be circumspect about reducing deposit rates since there are many tax-free schemes offering returns ranging from 8.3% to 8.5%.

RBI cuts CRR, home loans to get cheaper - Times of India