RBI raises repo rate to 5.50%: what it means for your EMI

On 7 October 2026 the Reserve Bank of India raised the policy repo rate by 0.25 percentage points, from 5.25% to 5.50%. It is the first increase since February 2023, and comes after the cuts of 2025 that took the rate from 6.50% down to 5.25%. Every floating-rate loan linked to the repo rate – most home loans, loans against property and MSME loans from banks – will cost 0.25% more from its next reset date.

Published 2026-10-26 · Funding Desk credit panel · Source: Reserve Bank of India

The decision in short

• Repo rate: 5.50% (up from 5.25%)
• Standing Deposit Facility: 5.25% · Marginal Standing Facility and Bank Rate: 5.75%
• Stance: changed from neutral to calibrated tightening
• Reason: CPI inflation rose to 4.8% in August 2026 and RBI expects it to average close to 5.8% over the next three quarters, led by food and fuel prices
• RBI projects GDP growth of 7.1% for 2026-27
• Next policy meeting: 2–4 December 2026

How much will your EMI go up?

Assuming the bank passes on the full 0.25% and keeps the tenure the same:

Many banks keep the EMI unchanged for home loans and stretch the tenure instead. On a ₹50 lakh, 20-year loan at 7.50%, a 0.25% rise keeps the EMI at ₹40,280 only if about 12 more months are added – which costs more interest over the life of the loan than paying the slightly higher EMI.

When will your bank pass it on?

Loans to individuals and MSMEs from banks are priced as an external benchmark (the repo rate plus the bank’s mark-up, called EBLR or RLLR) plus a spread for your profile. The bank revises its EBLR soon after the policy, but your loan picks up the new rate only on its reset date – check your sanction letter for the reset frequency. You can see each bank’s current EBLR and RLLR on our repo, EBLR and RLLR page, read from the banks’ websites twice a day.

Loans linked to MCLR (older loans, and most corporate loans) move more slowly – the MCLR changes as the bank’s cost of funds changes, and your rate resets usually once a year.

What our credit panel suggests

• Ask for a lower spread, not just a switch. If your credit score has improved since you took the loan, most banks will cut the spread for a small conversion fee. That can more than cancel this hike.
• Choose a higher EMI over a longer tenure if you can afford it – you pay much less interest.
• Businesses with cash credit should expect interest to rise from the next month. Keep drawing-power statements current so you do not pay interest on more than you need.
• Planning a new loan? Lock in the sanction now if your file is ready. RBI has signalled that cuts are off the table for now.
• Old MCLR or base-rate loans are often priced well above the market today. Moving them to a repo-linked loan with the same bank or a new one can save 0.5%–1.5% a year.

Common questions