RBI Repo Rate Cut News: RBI Cuts Repo Rate By 50 bps; Home, Personal Loan EMIs May Come Down In Savings Boost

Last Updated:June 06, 2025, 15:08 IST

RBI Repo Rate Cut: cut the repo rate by 50 basis points, reducing it to 5.50 percent. This will lower EMIs for existing customers and make new loans more affordable.

RBI Repo Rate Cut Impact: The Reserve Bank of India (RBI) on Friday announced another reduction in the repo rate by 50 basis points, which is welcome news for those paying Equated Monthly Installments (EMIs). This decision means that existing customers will see a decrease in their EMIs, and new borrowers will soon find home loans, auto loans, and personal loans more affordable.

With this recent cut, the repo rate— the interest rate at which the RBI lends to banks— now stands at 5.50 percent, down from 6 percent. This marks the third interest rate cut by the RBI since the COVID-19 pandemic.

Also See: RBI MPC Meeting Live

Between May 2020 and April 2022, the RBI kept the repo rate steady at 4 percent. From April 2022 to February 2023, the RBI gradually increased the policy rates to 6.5 percent, maintaining this rate for two years until the recent reductions.

Also See: RBI Cuts Repo Rate By 50 bps; Home, Personal Loan EMIs May Come Down In Savings Boost

This move brings further relief to homebuyers looking to avail loans. Those who were hesitant about taking loans may now feel more confident in pursuing home ownership. On the other hand, existing borrowers, especially those with floating-rate loans linked to the repo rate, can expect lower EMIs. Public sector banks, which usually act faster in passing on such cuts, are expected to roll out attractive loan offerings. This will create significant savings for borrowers, said Atul Moga, CEO & Co-Founder, BASIC Home Loan.

RBI Repo Rate Cut impact On Home Loan EMI

Example: A Rs 50 lakh home loan from HDFC Bank over 30 years at an 8.70% interest rate.

Current EMI: Rs 39,136

Scenario:

As interest rate drops by 50 bps to 8.20%

New EMI: Rs 37,346

Monthly Savings: Rs 1,790

Annual Savings: Rs 21,480

Over a 30-year term, even small monthly savings add up to lakhs of rupees. While Rs 900–1,800 per month might not feel huge now, it brings real long-term financial relief.

Also See: RBI Cuts Interest Rates For 3rd Time In A Row, Repo Rate Reduced By ‘Jumbo’ 50 Bps; CRR Slashed By 100 Bps

RBI Repo Rate Cut Impact on Personal Loan EMI

Example: A Rs 5 lakh personal loan at 12% for 5 years

Current EMI: Rs 11,122

Scenario:

As interest rate drops by 50 bps to 11.50%

New EMI: Rs 10,963

Monthly Savings: Rs 159

Annual Savings: Rs 1,908

These are rough estimates, and the final savings on EMIs will depend on individual bank decisions regarding EMI loan rate cuts. Loan interest rates consist of two components— the Marginal Cost of Funds based Lending Rate (MCLR) and the spread. While the MCLR is likely to be reduced following the RBI’s repo rate cut, the spread varies among banks and depends on how much of the interest rate cut is passed on to customers.

Varun Yadav

Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More

Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More

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