What you need to know
The repo rate is the rate at which RBI lends overnight to banks. RBI cut it by 1.25 percentage points during 2025, from 6.50% to 5.25%, and held it at 5.25% with a neutral stance at the 5 August 2026 policy (standing deposit facility 5.00%, marginal standing facility 5.50%). Since October 2019 banks must link new floating-rate retail loans to an external benchmark — nearly all use the repo rate.
Current benchmarks
| Benchmark | Rate | Note |
|---|---|---|
| RBI repo rate | 5.25% | Unchanged at the 5 Aug 2026 policy (neutral stance) |
| SBI EBLR | 7.90% | Repo + 2.65% (effective 15 Dec 2025) |
| SBI 1-year MCLR | 8.70% | Effective 15 Sep 2026 |
| HDFC Bank 1-year MCLR | 8.35% | Effective 7 Sep 2026 |
| PNB 1-year MCLR | 8.80% | Effective 1 Sep 2026 |
| Canara Bank 1-year MCLR | 8.75% | Effective 12 Jun 2026 |
How much a 1.25 pp cut saves
| Scenario | Loan rate | EMI (₹50 lakh, 20 yrs) | Total interest |
|---|---|---|---|
| Before 2025 cuts (illustrative spread) | 8.75% | ₹44,186 | ₹56,04,529 |
| After 1.25 pp cut passed through fully | 7.50% | ₹40,280 | ₹46,67,118 |
If your lender keeps the EMI unchanged after a cut, the tenure shortens instead. Ask for the option that suits you under RBI’s 2023 reset rules.
How quickly cuts reach you
| Loan type | When the change applies | Example |
|---|---|---|
| Repo-linked (EBLR) bank loans | Within 3 months (next reset date) | SBI EBLR fell to 7.90% from 15 Dec 2025 |
| MCLR-linked loans | At your annual reset date, and MCLR itself falls slowly | SBI 1-year MCLR 8.70% |
| HFC PLR-linked loans | At the lender’s discretion | E.g. Sammaan RMLR last reset Feb 2023 |
EMI calculator
Frequently asked questions
Does a repo cut reduce my EMI automatically?
Most lenders keep the EMI and shorten the tenure. You can ask for a lower EMI instead.
When is the next RBI policy?
RBI’s Monetary Policy Committee meets every two months; check rbi.org.in for the current schedule.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.