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In summary
RBI Repo Rate 2026 - Current Rate, Impact and Latest Updates
The repo rate is the single most important lever influencing home loan interest rates in India. Four consecutive cuts have created one of the most favourable borrowing environments in recent years for homebuyers.
This page covers:
- What the repo rate is and how it works
- Current repo rate: 6.50%* as of 5 December 2025
- RBI's latest monetary policy decision and GDP outlook
- How the repo transaction mechanism works
- Impacts of a repo rate cut: 8 effects across the economy
- RBI repo rate history: 2005 to 2025
- How repo rate cuts affect your home loan EMI
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What is the repo rate?
The Repo Rate, short for 'Repurchase Agreement Rate', is the interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities. It is RBI's primary monetary policy tool for managing liquidity in the economy and controlling inflation.
When the RBI changes the repo rate, it directly affects the cost at which banks and housing finance companies access funds, which in turn influences the lending rates offered to consumers, including home loan borrowers.
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What is the current repo rate?
India’s current policy repo rate stands at 6.50%*.
The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, unanimously voted to maintain the benchmark interest rate at its latest meeting, which concluded on August 5, 2026. The central bank has also retained its “Neutral” policy stance, aiming to support economic growth while closely monitoring inflation.
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How does the repo rate work?
The repo transaction between RBI and commercial banks comprises specific components:
- Financial institutions must provide RBI with eligible securities exceeding the Statutory Liquidity Ratio (SLR) limit to borrow funds
- Loans provided to commercial lenders can be structured as overnight or term agreements
- The applicable repo rate determines the interest charged on the loan amount
On repayment, financial lenders repurchase the security provided to RBI as collateral
When the RBI changes the repo rate, it affects the cost of credit for financial companies, which in turn influences the interest rates these companies offer to the public, including home loan borrowers.
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What are the impacts of a repo rate cut?
| Impact | Effect |
|---|---|
| Lower borrowing costs | Banks access funds more cheaply, potentially leading to lower lending rates for households and businesses |
| Lower deposit returns | Savings accounts and fixed deposits may offer reduced interest, affecting income of savers, especially retirees |
| Cheaper loans | Home, personal, and vehicle loan EMIs may decrease, easing monthly budgets |
| Inflationary pressure | Increased borrowing and spending can raise demand, potentially pushing prices up if supply does not keep pace |
| Increased credit flow | More affordable credit may increase loan demand, encouraging investment and consumption |
| Pressure on bank margins | If lending rates fall but deposit rates remain unchanged, bank profit margins on loans may shrink |
| Support for growth | Rate cuts stimulate economic activity, investment, and job creation |
| Currency volatility | Lower rates can reduce foreign investment inflows, potentially causing currency fluctuations |
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RBI repo rate history — 2005 to 2026
| Effective date | Repo rate | % change |
|---|---|---|
| 5 August 2026 | 5.25% | - |
| 5 June 2026 | 5.25% | - |
| 8 April 2026 | 5.25% | - |
| 6 February 2026 | 5.25% | - |
| 5 December 2025 | 5.25% | 0.25% |
| 6 June 2025 | 5.50% | 0.50% |
| 9 April 2025 | 6.00% | 0.25% |
| 7 February 2025 | 6.25% | 0.25% |
| 6 December 2024 | 6.50% | - |
| 18 September 2024 | 6.50% | - |
| 8 June 2023 | 6.50% | - |
| 8 February 2023 | 6.50% | 0.25% |
| 7 December 2022 | 6.25% | 0.35% |
| 30 September 2022 | 5.90% | 0.50% |
| 5 August 2022 | 5.40% | 0.50% |
| 8 June 2022 | 4.90% | 0.50% |
| May 2022 | 4.40% | 0.40% |
| 9 October 2020 | 4.00% | 0% |
| 6 August 2020 | 4.00% | 0% |
| 22 May 2020 | 4.00% | 0.40% |
| 27 March 2020 | 4.40% | 0.75% |
| 6 February 2020 | 5.15% | 0.25% |
| 7 August 2019 | 5.40% | 0.35% |
| 6 June 2019 | 5.75% | 0.25% |
| 4 April 2019 | 6.00% | 0.25% |
| 7 February 2019 | 6.25% | 0.25% |
| 1 August 2018 | 6.50% | 0.25% |
| 6 June 2018 | 6.25% | 0.25% |
| 2 August 2017 | 6.00% | 0.25% |
| 4 October 2016 | 6.25% | 0.25% |
| 5 April 2016 | 6.50% | 0.25% |
| 29 September 2015 | 6.75% | 0.50% |
| 2 June 2015 | 7.25% | 0.25% |
| 4 March 2015 | 7.50% | 0.25% |
| 15 January 2015 | 7.75% | 0.25% |
| 28 January 2014 | 8.00% | 0.25% |
| 29 October 2013 | 7.75% | 0.25% |
| 20 September 2013 | 7.50% | 0.25% |
| 3 May 2013 | 7.25% | 0.50% |
| 17 March 2011 | 6.75% | 0.25% |
| 25 January 2011 | 6.50% | 0.25% |
| 2 November 2010 | 6.25% | 0.25% |
| 16 September 2010 | 6.00% | 0.25% |
| 27 July 2010 | 5.75% | 0.25% |
| 2 July 2010 | 5.50% | 0.25% |
| 20 April 2010 | 5.25% | 0.25% |
| 19 March 2010 | 5.00% | 0.25% |
| 21 April 2009 | 4.75% | 0.25% |
| 5 March 2009 | 5.00% | 0.50% |
| 5 January 2009 | 5.50% | 1.00% |
| 8 December 2008 | 6.50% | 1.00% |
| 3 November 2008 | 7.50% | 0.50% |
| 20 October 2008 | 8.00% | 1.00% |
| 30 July 2008 | 9.00% | 0.50% |
| 25 June 2008 | 8.50% | 0.50% |
| 12 June 2008 | 8.00% | 0.25% |
| 30 March 2007 | 7.75% | 0.25% |
| 31 January 2007 | 7.50% | 0.25% |
| 30 October 2006 | 7.25% | 0.25% |
| 25 July 2006 | 7.00% | 0.50% |
| 24 January 2006 | 6.50% | 0.25% |
| 26 October 2005 | 6.25% |
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How does a repo rate cut affect your home loan EMI?
For floating-rate home loans linked to an external benchmark like the repo rate, a cut is typically passed on by lenders within 3 months (per RBI's external benchmark linking guidelines). Depending on how your specific lender applies the reduction, you will see either:
- A lower EMI with your tenure unchanged, or
- A shorter remaining tenure with your EMI unchanged
The repo rate is the single biggest external factor shaping your home loan cost. Being held steady at 6.50%*, current market conditions continue to favour both new borrowers and those looking to optimise existing floating-rate loans through a balance transfer. Bajaj Finance offers home loans from 7.25% p.a.* with amounts up to Rs. 15 Crore* and tenures up to 32 years. Check your eligibility today.
Frequently Asked Questions
Repo rate basics
Home loan impact
Policy rates
What is the meaning of repo rate?
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against eligible securities. It is an important monetary policy tool. When the RBI raises the repo rate, borrowing can become more expensive and help control inflation. A lower rate can support borrowing and economic growth.
What is the repo rate today?
As of August 2026, the RBI repo rate is 6.50%*. The Monetary Policy Committee kept it unchanged at its August 2026 meeting and retained a neutral policy stance. The rate has remained at 6.50%* since December 2025. The next scheduled MPC policy announcement is expected on 7 October 2026.
How does the repo rate affect floating rate home loans?
When the RBI changes the repo rate, a floating-rate home loan linked to an external benchmark may also see its interest rate change. However, the adjustment may not happen immediately because lenders follow their specified reset dates. RBI rules require external benchmark-linked interest rates to be reset at least once every three months.
Does a repo rate cut reduce tenure or EMI?
A repo rate cut can reduce your home loan interest rate, which may lower your EMI, shorten your repayment tenure, or both, depending on the lender's approach and your preference. If the EMI remains unchanged after a rate cut, the loan may be repaid sooner. Alternatively, a lower EMI can reduce the monthly repayment burden.
What is the difference between the repo rate and the home loan rate?
The repo rate is the RBI's benchmark policy rate, whereas a home loan rate is the rate charged by the lender to the borrower. For an external benchmark-linked floating loan, the lending rate is generally determined by adding the lender's spread to the applicable benchmark. The spread may differ according to the lender and borrower's profile.
What is the current reverse repo rate?
The RBI's fixed reverse repo rate is currently 3.35%. However, the Standing Deposit Facility (SDF) at 5.00% now serves as the floor of the RBI's policy corridor. Therefore, while 3.35% remains the stated fixed reverse repo rate, the SDF is the operative facility for absorbing surplus liquidity without collateral.
What is the difference between the reverse repo rate and the SDF?
Both the reverse repo facility and SDF help the RBI absorb surplus liquidity from banks. The key difference is that the SDF does not require collateral, while the reverse repo facility involves securities. The SDF, currently at 5.00%, serves as the floor of the policy corridor, while the fixed reverse repo rate is 3.35%.
What is the SDF rate today?
The Standing Deposit Facility (SDF) rate is currently 5.00%. It is 25 basis points below the repo rate of 5.25% and forms the floor of the RBI's policy corridor. Under the SDF, banks can deposit surplus overnight funds with the RBI without providing government securities as collateral.
What is the RBI's policy corridor?
The RBI's policy corridor is the range within which short-term money market rates are influenced by its policy facilities. The SDF at 5.00% forms the floor, while the MSF at 5.50% forms the ceiling. The repo rate of 5.25% sits between them, creating a 25-basis-point band on either side.
What is the MSF rate today?
The Marginal Standing Facility (MSF) rate is currently 5.50%, which is 25 basis points above the repo rate. It is an overnight borrowing facility available to banks when they need additional funds. Banks can use eligible securities within the prescribed limits to access MSF funds when other liquidity options are insufficient.
What is the difference between the repo rate and the MSF rate?
The repo rate is the RBI's main short-term lending rate for banks and currently stands at 5.25%. The MSF rate is 5.50%, or 25 basis points higher, and provides banks with an additional overnight borrowing facility. The MSF therefore acts as the upper end of the RBI's policy corridor.
Does a change in the repo rate affect the SDF and MSF?
Yes. The SDF and MSF rates are positioned 25 basis points below and above the repo rate, respectively. With the repo rate currently at 5.25%, the SDF is 5.00% and the MSF is 5.50%. Therefore, a change in the repo rate can result in corresponding changes to these policy rates.
What is the bank rate and how does it differ from the repo rate?
The Bank Rate is currently 5.50%, while the repo rate is 6.50%*. The repo rate is the RBI's main short-term lending rate to banks against eligible securities. The Bank Rate is a broader reference rate used for certain RBI lending and regulatory purposes and is currently aligned with the MSF rate.
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