On 7 October 2026, the Reserve Bank of India raised the repo rate by 0.25 percentage points, from 5.25% to 5.50%. It is the first increase since February 2023. If you have a floating-rate home loan, your interest rate will probably rise within weeks, and several banks moved the very next day. Here is what changed, how it reaches your EMI, and the choices you have.
What the RBI announced
The Monetary Policy Committee resolution sets out the numbers, effective from 7 October 2026:
Repo rate: 5.50% (up from 5.25%). The vote was unanimous.
Standing deposit facility rate: 5.25%. Marginal standing facility rate and bank rate: 5.75%.
Stance: changed from neutral to "calibrated tightening". Two of the six members preferred to keep the neutral stance.
Projections for 2026-27: CPI inflation 5.2%, rising to 6.0% in the October to December quarter; real GDP growth 7.1%.
Governor Sanjay Malhotra also said that rate cuts are off the table in the near term and that the next move can only be a hike or a pause. The next meeting is on 2 to 4 December 2026.
How a repo hike reaches your loan
It depends on what your loan is linked to.
Repo-linked loans (most new floating loans since 2019)
Since 1 October 2019, banks have had to link new floating-rate retail loans, such as home and auto loans, to an external benchmark like the repo rate, and to reset the rate at least once every three months. Your rate is the bank's repo-linked lending rate plus a fixed spread. When the repo moves, the bank's benchmark moves with it.
That is exactly what happened. As ETV Bharat reported, from 8 October 2026:
Punjab National Bank raised its RLLR from 8.10% to 8.35%.
Indian Bank raised its RBLR from 7.95% to 8.20%.
Bank of Baroda raised its RBLR from 7.90% to 8.15%.
Bank of India, Indian Overseas Bank and Tamilnad Mercantile Bank also announced increases.
Your own rate changes on your loan's next reset date, which is in your sanction letter. If your bank has not announced anything yet, check its website for the current benchmark rate.
MCLR-linked and older loans
Loans linked to the bank's MCLR move more slowly, because MCLR depends on the bank's cost of funds and resets on the dates in your agreement, often yearly. The hike will still show up, but later and not always by the full 0.25 points.
Fixed-rate loans
Nothing changes until the fixed period ends.
What 0.25% does to an EMI, in rupees
Take a ₹30 lakh home loan with 20 years left, where your rate moves from 8.10% to 8.35%. (Your actual rate is your bank's benchmark plus your spread, so use your own number.)
At 8.10%, the EMI is about ₹25,280.
At 8.35%, it is about ₹25,751. That is roughly ₹470 more a month, or about ₹5,640 a year.
Many banks keep the EMI the same and stretch the tenure instead. On the same loan, keeping the EMI at ₹25,280 at 8.35% adds about 12 months to the repayment period. Here is the catch: total interest paid over the life of the loan rises from about ₹30.7 lakh to about ₹33.7 lakh with the longer tenure, against about ₹31.8 lakh if you pay the higher EMI. A small monthly saving costs over ₹1.8 lakh more in the long run.
All figures are rounded and assume the rate stays put for the rest of the loan, which it will not. They show the direction, not your exact bill.
Your rights when the rate resets
Since 31 December 2023, under an RBI circular on floating-rate EMI loans, lenders must explain your options when the rate is reset. As this FAQ on the circular sets out, those include:
Increasing the EMI, extending the tenure, or a mix of both.
Prepaying part or all of the loan.
Switching to a fixed rate, where the lender offers one, with the switching charges disclosed upfront.
Lenders must also give you a quarterly statement showing principal and interest paid, the EMI, the number of EMIs left and the annualised rate. If you have not seen one, ask.
What about fixed deposits?
Higher policy rates usually push deposit rates up, but with a lag, and banks raise lending rates faster than deposit rates. Do not expect FD rates to jump this week. If you are about to book a large FD, one option is to split it across a few months rather than locking everything today, so later bookings can catch any increase. On a ₹1 lakh deposit, an extra 0.25% is ₹250 a year before tax, so do not delay a deposit you need for safety just to chase it.
What to do this week
Find your loan's benchmark (repo-linked, MCLR or fixed) and reset date in the sanction letter.
When the bank writes to you about the reset, choose deliberately. If your budget allows, a higher EMI saves far more interest than a longer tenure.
If you have spare savings beyond your emergency fund, a part-prepayment now reduces the principal that the higher rate applies to.
Check your spread. If yours is much higher than what the bank offers new borrowers, ask about a conversion, and compare the fee against the savings.
With the RBI signalling that more hikes are possible, it is worth deciding your plan now rather than at the December meeting.
This is general information, not financial advice. Check the terms of your own loan with your lender.
