Key Points

What is the repo rate, and how does it affect your EMI?

  • The repo rate is the rate at which the RBI lends short-term money to banks against government securities.
  • On 7 October 2026, the RBI's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50%.
  • When the repo rate rises, interest rates on many loans, especially floating-rate home loans, can go up.
  • The RBI uses the repo rate to manage inflation and growth.

What Is the Repo Rate, and Why Does It Change Your EMI?

Every few months, you see the headline: "RBI changes repo rate." And soon after, people start talking about home loan EMIs.

So what exactly is the repo rate, and why does it matter to you?

What Is the Repo Rate?

Banks sometimes need money for a short time. They can borrow it from the Reserve Bank of India by pledging government securities.

The interest rate the RBI charges for this is called the repo rate. It is decided by the RBI's Monetary Policy Committee (MPC), chaired by the RBI Governor.

What Is the Repo Rate Now?

At its meeting from 5 to 7 October 2026, the MPC increased the repo rate by 25 basis points to 5.50%. As a result, the Standing Deposit Facility rate is now 5.25%, and the Marginal Standing Facility rate and the Bank Rate are 5.75%. The MPC also changed its stance to "calibrated tightening".

These rates are as of October 2026 and change with each RBI policy decision.

Why Does It Change Your EMI?

When the repo rate goes up, borrowing becomes more expensive for banks. Banks usually pass this on to customers, so interest rates on many loans, especially floating-rate home loans, can go up. That can mean a higher EMI or a longer loan tenure.

When the repo rate comes down, the opposite can happen.

The RBI uses this rate as a tool to manage inflation and growth. Raising it generally aims to cool down rising prices.

Quick Facts

QuestionAnswer
Repo rate (Oct 2026)5.50%
Change on 7 Oct 2026Increased by 25 basis points
SDF rate5.25%
MSF rate and Bank Rate5.75%
Decided byRBI's Monetary Policy Committee

Test Yourself

1. Who decides the repo rate in India?
(A) Ministry of Finance (B) SEBI (C) RBI's Monetary Policy Committee (D) State Bank of India

2. If the repo rate goes up, what usually happens to floating-rate home loan EMIs?
(A) They usually rise (B) They usually fall (C) They never change (D) Loans are cancelled

Answers:
1. (C) RBI's Monetary Policy Committee.
2. (A) They usually rise.
One rate in Mumbai.

An effect on EMIs across India.
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