The Reserve Bank of India (RBI) has raised the repo rate by 25 basis points, or 0.25 percentage points, to 5.50% from 5.25% at its October monetary policy review. The decision was taken by the Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, amid global economic uncertainty and rising crude oil prices.
RBI Governor Sanjay Malhotra said during the monetary policy review that the committee unanimously decided to raise the repo rate after a comprehensive assessment of prevailing economic and financial conditions.
The repo rate is the rate at which the RBI provides short-term funds to commercial banks when required. Changes in the rate can affect interest rates across the banking system and the cost of borrowing.
Following the 25-basis-point increase in the repo rate, other key policy rates were also adjusted. The Standing Deposit Facility (SDF) Rate was adjusted to 5.25%, while the Marginal Standing Facility (MSF) Rate and Bank Rate increased to 5.75%.
The RBI's decision may affect customers borrowing from banks. An increase in the repo rate can raise banks' funding costs, which may be passed on to customers through changes in loan interest rates. Home loans, car loans and personal loans may be affected.
If banks raise lending rates, EMIs on floating-rate loans may increase or the loan tenure may become longer. However, the actual impact will depend on the interest rate charged by each bank, the type of loan and the existing terms applicable to the customer. Borrowers will therefore need to consider revised bank interest rates and EMIs following the RBI's decision.
The RBI had not raised the repo rate since February 2023. The central bank subsequently maintained a stable policy stance for an extended period, while policy rates were cut by a cumulative 125 basis points in 2025 amid a moderation in inflation.
Against the backdrop of changing conditions, the RBI has now decided to raise the interest rate again. The central bank faces the task of balancing inflation control with economic growth.
