On June 6, 2025, the Reserve Bank of India cut its repo rate by 50 basis points—from 6.00% to 5.50%. At first glance, that may seem like just another macroeconomic adjustment. But for millions of Indian home loan borrowers, it could mean thousands saved every single month, and lakhs over the loan tenure. There’s a catch, though: these savings won’t land in your lap unless you take decisive, time-bound action. Your bank won’t notify you—and if you miss the window, you could lose a financial opportunity worth lakhs.
Let’s unpack what this means for you.
The Repo Rate Domino Effect
The repo rate is the interest rate at which the RBI lends to commercial banks. When this rate is cut, it becomes cheaper for banks to borrow. In theory, they should pass this benefit to you—the consumer—by lowering the interest on loans, particularly home loans tied to external benchmarks like the Repo Linked Lending Rate (RLLR).
For someone with a ₹50 lakh home loan over 20 years, a 0.5% rate cut can lower your monthly EMI by ₹1,569. That’s ₹18,828 saved annually and over ₹2.6 lakh across the tenure. But this drop doesn’t happen automatically.
Why Most People Miss Out
Many assume the bank will adjust their EMI automatically after an RBI cut. But repo-linked loans reset every 3 months—and you need to ensure that reset actually happens.
Worse still, if your loan is linked to the older MCLR system or fixed-rate structure, your EMI could remain unchanged for 6–12 months—or forever—unless you actively switch.
Banks, unsurprisingly, aren’t incentivised to reduce your EMI voluntarily. That’s why it’s crucial to take initiative.
Step-by-Step: How to Secure the Savings
Step 1: Confirm Your Loan Type
Call your bank and ask: “Is my loan linked to the repo rate or MCLR?”
- If it’s repo-linked (RLLR/EBLR), proceed to the next step.
- If it’s MCLR or fixed, ask: “Can I switch to repo-linked? What are the charges?”
Example: HDFC charges ₹2,500 for the switch. ICICI may charge up to ₹5,000. These fees can be recovered in just a few months through EMI savings.
Step 2: Find Your Reset Date
Repo-linked loans reset quarterly, but not immediately after RBI changes the rate. Ask: “When is my next reset date as per the RBI rule?”
If the RBI cut happened on June 6, your rate may reset on August 1. Mark that date—your EMI should drop from that cycle onward.
Step 3: Calculate Your Savings
Use an EMI calculator to verify the difference. For example:
- Old rate: 8.5%
- New rate: 8.0%
- Loan: ₹50,00,000
- Tenure: 20 years
- Monthly savings: ₹1,569
You can choose to keep the EMI same and shorten the tenure by 10–15 months instead—another smart way to save on interest.
Step 4: Monitor and Escalate
If 90 days pass with no change in your EMI, you have the right to escalate.
RBI’s 2019 (updated in 2024) circular mandates banks to reset repo-linked loans at least every three months.
Send an email with the subject: “Interest Reset Request under RBI Circular”. If still unresolved, file a complaint at cms.rbi.org.in under ‘Loan/EMI > Interest Rate Issue’.
The Silent Trap of Fixed-Rate Loans
Fixed-rate loan holders don’t benefit from repo cuts. If your personal, auto, or home loan is still on a fixed interest structure, refinancing or transferring to a repo-linked loan is your only route to lower EMIs. Many banks are now offering repo-linked loans even for cars and education—worth exploring.
Industry Impact and What Lies Ahead
The rate cut has been welcomed across sectors. Beyond home loans, personal loans and auto loans are expected to become cheaper, offering further relief in an era of high living costs.
With inflation at 4.5% and GDP growth at 6.7% for Q1 FY26, economists believe the RBI may cut rates again in August 2025. That makes this the perfect time to recalibrate your finances.
Simply put, the RBI repo rate cut gives you a golden window to slash your EMIs and save lakhs. But unless you act—ask, confirm, and follow up—you might miss out completely. Set a calendar reminder. Call your bank. Save that money.
