Repo rate unchanged: How RBI's decision impacts your home loan, FD, savings
RBI retains repo rate at 5.25 per cent amid global uncertainty. It also maintained the stance at neutral.
- Apr 8, 2026,
- Updated Apr 8, 2026 11:52 AM IST
The Reserve Bank of India (RBI) retained the repo rate at 5.25 per cent, and maintained the stance at neutral, as stated by Governor Sanjay Malhotra during the MPC announcements. This will come as a relief for home loan borrowers.
This decision means that loans linked to repo rate won’t be changed.
How repo rate impacts home loan, FD and savings
The repo rate is the interest rate at which the RBI lends money to commercial banks. It serves as a key tool for the RBI to manage inflation and liquidity in the economy. When the economy is growing and there is excess money circulating, inflation tends to rise. To control this, the RBI may increase policy rates such as the repo rate and the cash reserve ratio (CRR). Higher rates discourage banks from borrowing from the RBI due to increased costs, leading to more savings.
MUST READ | RBI MPC 2026: Repo rate unchanged at 5.25%, maintains neutral stance
Most bank loans in India are linked to the repo rate. Therefore, when the repo rate goes up, loan interest rates also increase. For instance, if a home loan of Rs 50 lakh is taken at an 8 per cent interest rate for 20 years, a rise to 9 per cent would increase the monthly EMI by approximately Rs 3,164, from Rs 41,822 to Rs 44,986.
Conversely, a reduction in the repo rate by the RBI leads to lower loan interest rates and reduced EMI payments. This mechanism directly impacts borrowers by making loans more or less expensive depending on the repo rate changes.
A rise in repo rate will increase your FD interest rates, meaning you would save more over time. FDs prior to the change would continue at the earlier rates.
DON'T MISS | RBI holds repo rate: Home loan EMIs stay stable, borrowers save up to ₹13.9 lakh
Savings accounts also get affected by a change in repo rate. If RBI increases the repo rate, banks will offer higher interest rates on savings accounts, and if the repo rate drops then the savings account interest rates would decrease too.
This link between the RBI’s repo rate and loan EMIs is crucial for individuals and businesses to understand, as it affects monthly financial commitments.
The Reserve Bank of India (RBI) retained the repo rate at 5.25 per cent, and maintained the stance at neutral, as stated by Governor Sanjay Malhotra during the MPC announcements. This will come as a relief for home loan borrowers.
This decision means that loans linked to repo rate won’t be changed.
How repo rate impacts home loan, FD and savings
The repo rate is the interest rate at which the RBI lends money to commercial banks. It serves as a key tool for the RBI to manage inflation and liquidity in the economy. When the economy is growing and there is excess money circulating, inflation tends to rise. To control this, the RBI may increase policy rates such as the repo rate and the cash reserve ratio (CRR). Higher rates discourage banks from borrowing from the RBI due to increased costs, leading to more savings.
MUST READ | RBI MPC 2026: Repo rate unchanged at 5.25%, maintains neutral stance
Most bank loans in India are linked to the repo rate. Therefore, when the repo rate goes up, loan interest rates also increase. For instance, if a home loan of Rs 50 lakh is taken at an 8 per cent interest rate for 20 years, a rise to 9 per cent would increase the monthly EMI by approximately Rs 3,164, from Rs 41,822 to Rs 44,986.
Conversely, a reduction in the repo rate by the RBI leads to lower loan interest rates and reduced EMI payments. This mechanism directly impacts borrowers by making loans more or less expensive depending on the repo rate changes.
A rise in repo rate will increase your FD interest rates, meaning you would save more over time. FDs prior to the change would continue at the earlier rates.
DON'T MISS | RBI holds repo rate: Home loan EMIs stay stable, borrowers save up to ₹13.9 lakh
Savings accounts also get affected by a change in repo rate. If RBI increases the repo rate, banks will offer higher interest rates on savings accounts, and if the repo rate drops then the savings account interest rates would decrease too.
This link between the RBI’s repo rate and loan EMIs is crucial for individuals and businesses to understand, as it affects monthly financial commitments.