RBI Repo Rate Cut: EMIs to Drop, Big Relief to Loan Borrowers!!

What is Repo Rate?

The full form of Repo Rate is Repurchase Agreement Rate or Repurchasing Option Rate. It is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. 

🔍 Repo Rate Cut Details

On June 6, 2025, RBI cut the repo rate by 50 basis points, reducing it from 6.0% to 5.50%.This marks the third rate cut this year, taking total easing to 1.00%—with two earlier 25‑bps cuts in Feb and Apr

🚨 Significant Impact on Loans

Banks borrowing costs reduce, which prompts many to pass on the benefit via lower loan rates .

Example: SBI cut its RLLR from 8.25% to 7.75%; other public lenders like PNB, BOI, BoB, Canara Bank also trimmed RLLR/EBLR by 50 bps in June

🏠 How Our EMI or Loan Tenure May Change

Home loans (50 L over 20 yrs): Your monthly EMI could drop by ₹1,500–3,100, saving around ₹18k–37k/year; over the entire tenure, it could total ₹2–6 lakh+

Personal loans: Expect reductions too—e.g., a ₹10 L/5‑yr personal loan rate dropping 1% could save ₹500/month, total ₹30k interest .

🧩 Benefit Isn’t Automatic

Only borrowers with repo‑linked or external benchmark (EBLR)-linked loans see the reduction.

If your loan uses MCLR or is fixed-rate, banks aren’t obligated to pass on cuts

Even repo-linked borrowers must actively request the new rate within 90 days, or they risk losing out .

💡 What You Should Do!!

1 Check your loan agreement: is it repo-linked or using EBLR?

2 Contact your bank to apply the new rate if applicable—especially within 90 days.

3 Decide whether to:

  • Reduce your EMI (more monthly breathing room), or
  • Keep EMI constant to shorten loan tenure/increase interest savings

4 Consider refinancing if you’re on a scheme that doesn’t track repo rate—it may be worth it

So what are you waiting for!!Hurry to your nearest branch!!

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