RBI Cuts Repo Rate by 50 Basis Points – What It Means for Your EMIs and Savings
RBI has cut the repo rate by 50 basis points, bringing relief to borrowers and tension for savers. Here’s what this means for your EMIs, fixed deposits, and new loans.
The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points (bps) — the first major policy shift in over a year. The new repo rate stands at 5.50%, down from 6.00%.
If you’re repaying a loan or planning to invest in fixed deposits, this move could affect your finances directly.
Let’s break it down — simply and clearly.
🧠 What Is the Repo Rate?
Repo rate is the rate at which the RBI lends money to commercial banks. When the repo rate goes down, banks can borrow more cheaply — and often pass that benefit to you through:
- Lower loan EMIs
- Lower FD interest rates
🔽 Who Benefits from the Rate Cut?
Big Saving
🏠 1. Home Loan Borrowers
If you have a floating rate loan, your interest rate may drop soon.
Example:
- ₹30 lakh loan, 20 years
- EMI before (9.0%): ₹26,992
- EMI after (8.5%): ₹26,035
✅ You save ~₹957/month (~₹2.3 lakh over 20 years)
🚗 2. Auto Loan Borrowers
Auto loans may become slightly cheaper — especially from PSU banks like SBI, PNB, and Bank of Baroda.
🎓 3. Students with Education Loans
Interest on education loans (linked to MCLR or repo rate) may also decrease gradually.
😟 But Here’s Who May Lose Out
Lower Interest
🏦 1. Fixed Deposit Investors
Banks may reduce FD rates in coming weeks.
So, if you want to lock in higher FD rates — now is the time before the cuts reach you.
💳 2. Credit Card Users
Credit card interest is not directly affected by repo rates — you’ll still pay 36–42% annual interest. 😬
🕐 When Will the Impact Be Visible?
- Floating rate loans: 1–3 months
- New loans: Immediately, based on lender policies
- FDs: Rates may start dropping over next few weeks
What About People with Fixed Rate Loans?
~ If you took a fixed rate loan, your interest rate does NOT change — even if RBI reduces the repo rate.
🔒 Fixed rate = locked EMI
- Your monthly EMI remains the same for the agreed period (usually 3–5 years, sometimes full term)
Ankit Maheshwari
🔍 Why Did RBI Cut the Rate?
- Inflation is now within the comfort zone: 2.8%–3.2%
- RBI wants to boost consumption and business investment
- Global central banks (like the Fed) are also hinting at softening rates
🧾 What You Should Do Now
| If You... | Consider Doing This |
|---|---|
| Have a home/auto loan | Recheck with your bank for new EMI |
| Planning an FD | Lock it in now before rates fall |
| Considering new loan | Compare lenders – rates vary widely |
| Have savings in bank | Explore better options (sweep-in FD) |
⚠️ Disclaimer:
This article is for educational and informational purposes only. Bitveen is not a SEBI-registered financial advisor. The effects of repo rate changes may vary depending on your bank’s policies and loan terms. Please consult your bank or a qualified financial professional before making decisions related to loans, EMIs, or investments.