Loans to get cheaper as RBI cuts key interest rates

"The cut in repo and reverse repo would complement the stimulus package that the government might also announce. Through the cuts, the RBI is sending a message to banks that they must not only cut lending rates but also bring down their deposit rates," said Harihar Krishnamurthy, country treasurer at Development Credit Bank.

"Today's rate cuts indicate very strongly the RBI's concern to bring down interest rates. Liquidity is not an issue - it has been taken care of through the earlier measures," said Yogesh Agarwal, chairman and managing director, IDBI Bank.

Overnight call rates would definitely come down, he said, adding, "in a little while, both deposit and lending rates should also come down."

Public sector lender Dena Bank's chairman and managing director, P.L. Gairola, said that the RBI rate cuts were expected and that the apex bank "has sent a strong signal for interest rates to soften."

"It is a signal that money should become less costly. Deposit rates should decline in the coming days," he said.

India's second largest bank ICICI Bank said it would bring down home loan rates by 1.5 percent (from 13 percent to 11.5 percent) to revive the property market, which is on a downswing. The lender also promised to cut other loan rates.