Who Decides the Reverse Repo Rate in India? RBI Roles Explained

Last updated: Oct 2026

The reverse repo rate in India is set by the Reserve Bank of India (RBI), while the six-member Monetary Policy Committee (MPC) votes on the repo rate. The two are not the same decision.

• MPC: three RBI members and three external members, set up under Section 45ZB of the RBI Act, 1934
• Repo rate: 5.25%* as of 7 October 2026
• Standing deposit facility (SDF): 5.25%, which is repo minus 0.25 percentage point
• Fixed reverse repo rate: 3.35%, no longer the floor of the corridor
• Home loan effect: none directly, because the repo rate drives floating-rate loans

Read the repo rate for your home loan instalment and the SDF rate for bank liquidity. Treat the reverse repo rate as a background tool unless the RBI announces a change.

The RBI decides the fixed reverse repo rate, while the MPC votes on the repo rate. Since April 2022, the SDF rate has replaced the reverse repo rate as the floor of the policy corridor, and the RBI keeps the fixed reverse repo rate in its toolkit.

The RBI press release of 7 October 2026 gave the first four levels. The next MPC decision is due on 4 December 2026, so check the RBI website for the latest figures.

Six members sit on the MPC: three from the RBI and three external members appointed by the Central Government. Section 45ZB of the Reserve Bank of India Act, 1934 provides for the committee.

• The RBI Governor chairs it and holds a casting vote in a tie
• The Deputy Governor in charge of monetary policy is a member
• One officer nominated by the RBI Board is a member

• Three external members serve four-year terms and cannot be reappointed

  
  

Four members form a quorum. The committee must meet at least four times a year, and it holds six scheduled meetings. A majority vote fixes the repo rate. The latest meeting ran from 5 to 7 October 2026, and the next is scheduled for 2 to 4 December 2026.

The reverse repo rate is the rate at which the RBI borrows money from banks against government securities. It absorbs surplus cash from the banking system. When banks park money with the RBI at this rate, they earn interest and have less to lend.

Before April 2022, the reverse repo rate was the floor of the policy corridor. A bank with spare cash would not lend below that rate, because it could earn it from the RBI at no risk. The fixed rate stands at 3.35% today.

The SDF now does its old job. On 8 April 2022, the RBI introduced the SDF as the new floor. Banks deposit surplus cash overnight at the SDF rate without handing over government securities as collateral.

The SDF rate is 5.25%, which is 1.90 percentage points above the fixed reverse repo rate of 3.35%. Banks therefore park surplus cash at the SDF, not at the reverse repo window. The corridor now runs from the SDF at 5.25% to the marginal standing facility at 5.75%, with the repo rate at 5.25%* in the middle.

No, not directly. Only the repo rate feeds into floating-rate home loans, through the benchmark your lender uses.

Consider Pooja, a 36-year-old pharmacist in Jaipur with a household income of Rs. 1.1 lakh a month and a CIBIL Score of 748, with Rs. 44.06 lakh outstanding and 15 years left at 8.50% p.a. A cut of 0.25 percentage point in the repo rate lowers her EMI by Rs. 643 a month. A change in the fixed reverse repo rate lowers it by Rs. 0. See the guide to what happens when the repo rate decreases.

Bajaj Finance offers home loans with the terms below, subject to credit assessment.

Approval timelines can extend where the lender's benchmark resets after your sanction, and minimum income thresholds can differ by city. Check your home loan eligibility and test a rate change with the home loan EMI calculator.