जानिए Repo Rate क्या है

 

जानिए Repo Rate क्या है | कैसे आपकी EMI कम हो जाएगी

Table of Contents

1. What is Repo Rate?
2. How is Repo Rate decided?
3. Recent Change in Repo Rate by RBI
4. Why Does RBI Decrease Repo Rate?
5. Effect on Home, Car, and Personal Loan EMI (Explained with Examples)

1) What is Repo Rate?

The Repo Rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term money to commercial banks against government securities. It is a tool used by the RBI to control liquidity, inflation, and economic growth. When repo rates are reduced, borrowing becomes cheaper for banks, which then pass on the benefits to consumers in the form of lower interest rates on loans.

2) How is Repo Rate decided?

The Repo Rate is decided by the Monetary Policy Committee (MPC) of the RBI, which meets every two months. Several factors influence this decision:

• Inflation levels (Consumer Price Index)
• Economic growth (GDP)
• Liquidity in the banking system
• Global financial conditions

Based on these indicators, the committee votes on whether to increase, decrease, or maintain the repo rate.

3) Recent Change in Repo Rate by RBI

In June 2025, the RBI cut the Repo Rate by 50 basis points, bringing it down from 6.00% to 5.50%. This is one of the most significant cuts in recent times and marks a continued effort to support economic recovery and growth. It follows two earlier cuts in February and April, bringing the total cut to 100 basis points in 2025 so far.

4) Why Does RBI Decrease Repo Rate?

The RBI reduces the repo rate for several reasons:

• Boost Economic Growth: A lower rate encourages borrowing and spending by making loans cheaper.
• Control Inflation: When inflation is under control or below target, the RBI can afford to reduce the rate to stimulate demand.
• Improve Liquidity: Lower rates mean more money in the banking system, allowing banks to lend more easily to individuals and businesses.

5) Effect on Home, Car, and Personal Loan EMI (Explained with Examples)

When the repo rate is reduced, banks often lower their lending rates—especially for loans linked to the Repo Linked Lending Rate (RLLR). This directly affects the EMI (Equated Monthly Installment) you pay.

Example: Home Loan

Let’s assume you took a home loan of ₹1 crore for 20 years at 7% interest.

• EMI at 7% = ₹77,529 per month
• If the interest rate drops to 6.5% due to repo rate cut:
• New EMI = ₹74,626 per month
• Monthly Savings: ₹2,903
• Yearly Savings: ₹34,836

Example: Car Loan

Loan amount: ₹10 lakhs for 5 years at 9% interest.

• EMI at 9% = ₹20,758 per month
• If interest drops to 8.5%, EMI becomes = ₹20,513 per month
• Monthly Savings: ₹245
• Total 5-year Savings: ₹14,700

Example: Personal Loan

Loan amount: ₹5 lakhs for 3 years at 12% interest.

• EMI at 12% = ₹16,607 per month
• If interest drops to 11.5%, EMI becomes = ₹16,492 per month
• Monthly Savings: ₹115
• Total 3-year Savings: ₹4,140

Conclusion

The Repo Rate is a crucial tool for the RBI to manage inflation, liquidity, and economic growth. A reduction in this rate benefits loan borrowers directly by lowering their EMIs, making it easier to manage monthly finances. If you’re currently repaying a home, car, or personal loan, or planning to take one, understanding repo rate movements can help you make better financial decisions.