New Delhi30 minutes ago
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Your home loan and car loan may become expensive in the coming days. State Bank of India has claimed in its research report that the Reserve Bank of India may increase the repo rate.
According to the report, RBI may increase the repo rate by 0.25% in the credit policy of October, after which it can increase the same in December also. That means repo rates can increase by 0.50%.
Recently, in the Monetary Policy Committee meeting held in August, RBI had kept the repo rate constant at 5.25% for the fourth consecutive time. However, now it is considered almost certain to increase the rates in the next MPC meeting to be held between October 5 and 7.
SBI Research claims: Due to crude oil and inflation, it is necessary to increase repo rate.
SBI Research report states that crude oil prices in the international market have recently crossed $ 100 per barrel. Due to geopolitical uncertainties, the price of crude may reach an average of $ 105 to $ 123 per barrel in the next 15 days.
Apart from this, the scope of inflation in the country is continuously widening. The number of essential commodities having 90% share in the Consumer Price Index (CPI) was 22 in January 2026, which has increased to 53 by July. Input cost (production cost) has increased rapidly in sectors like crude oil, natural gas, beverages, pharmaceuticals and electronics, the direct burden of which is now being passed on to the customers.
For this reason, the report has advised RBI to immediately increase the repo rate to control inflation. It has also been made clear in the report that this decision of RBI will not be based on the stance of the US Federal Reserve, but on domestic economic risks.
What effect will it have on the common man’s pocket?
Any change in the repo rate of RBI has a direct impact on crores of borrowers of the country and FD investors depositing money in the bank:
- Impact on borrowers with floating rate loans: Loan rates of banks are directly linked to the repo rate of RBI. As the repo rate increases, banks increase their loan rates, due to which the monthly EMI of the existing floating rate loan increases.
- Expensive deal for new loan takers: For new customers, the interest rates available on home loan, auto loan or personal loan will be higher than before. However, it will not have any impact on those taking fixed-rate loans.
- Benefits to those making FD: Depositors get a big benefit from the increase in repo rate. When banks make loans expensive when the repo rate increases, they also increase the interest they receive on their fixed deposits.
Understand the maths: How much will the EMI increase on a home loan of ₹50 lakh?
Suppose you have taken a home loan of ₹50 lakh for a tenure of 20 years at a floating interest rate of 8.25%.
- present situation: Your monthly installment (EMI) comes to ₹42,603.
- After 0.50% increase: If RBI increases the repo rate by a total of 0.50% and banks pass the entire burden on the customers, then the loan interest rate will increase to 8.75%.
- New EMI: At this new rate your monthly installment will increase to approximately ₹44,186.
- Direct effect: This means you will have to pay ₹ 1,583 more installment every month and your expenses will increase by ₹ 18,996 in the entire year.
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