​RBI Cuts Repo Rate to 6% – These 4 Banks Just Made Your EMIs Cheaper!​

​RBI Cuts Repo Rate to 6%: The Reserve Bank of India (RBI) has officially reduced the repo rate to 6%, cutting it by 25 basis points in its April 2025 monetary policy meeting. This move is part of the RBI’s broader strategy to stimulate domestic demand and encourage investments, particularly in light of a slowing global economy and controlled inflation. The impact of this rate cut is already being felt, as several major banks have promptly responded by slashing their lending rates, providing immediate relief to borrowers.

For homebuyers, personal loan seekers, and existing borrowers with floating-rate loans, this news could not have come at a better time. The rate cut translates into reduced monthly EMIs and, over time, substantial interest savings. In this comprehensive article, we explain what the repo rate is, how it affects you, which banks have lowered rates, and what actions you should consider to make the most of this economic opportunity.

​RBI Cuts Repo Rate to 6%

The RBI’s decision to cut the repo rate to 6% in April 2025 is a well-timed move aimed at supporting borrowers and boosting economic activity. With several banks already announcing rate cuts, now is a great time to reassess your loan terms and take advantage of potential savings.

Whether you’re a new borrower or already repaying a loan, there are multiple strategies you can employ—reducing EMIs, shortening loan tenure, refinancing—to ensure you make the most of the evolving financial landscape. Be proactive, stay informed, and consider speaking with a financial advisor to tailor the best approach for your situation.

What Is the Repo Rate and Why Does It Matter?

The repo rate is the rate at which the RBI lends money to commercial banks for short-term purposes. It’s a crucial tool used by the central bank to manage liquidity, control inflation, and drive economic growth. When the repo rate decreases, it becomes cheaper for banks to borrow funds from the RBI. In turn, banks typically reduce the interest rates they charge customers for various types of loans.

A lower repo rate usually encourages borrowing and spending. It helps households save on loan repayments, allows businesses to invest more, and contributes to economic expansion. On the other hand, depositors might see slightly lower returns on savings accounts and fixed deposits. But overall, in a consumer-driven economy, this move helps stimulate activity across multiple sectors.

These 4 Banks Just Lowered Lending Rates

Let’s look at how four leading banks in India have reacted to the RBI’s decision:

1. Indian Bank

• Revised Repo-Linked Lending Rate (RLLR): 8.70% (down from 9.05%)
• Effective Date: April 11, 2025
• Applicable Loans: Housing, education, personal, MSME

2. Punjab National Bank (PNB)

• New RLLR: 8.85% (previously 9.10%)
• Effective From: April 10, 2025
• Loan Products Covered: Home loans, vehicle loans, and business loans

3. Bank of India

• Updated RBLR: 8.85%
• Reduction: 25 basis points
• Start Date: April 9, 2025
• Effect: Applies to all floating-rate loan products

4. HDFC Bank

• Action Taken: Expected to lower its floating-rate home and personal loan rates shortly
• Anticipated Rate: To be announced in line with repo movement

These rate adjustments are great news for both new borrowers and those with existing floating-rate loans, who will see reductions in their monthly EMIs soon.

EMI Reduction – A Real-World Example

To understand how much you could save, let’s walk through a simplified example:

Loan Amount: ₹40,00,000

Loan Tenure: 20 years

Old Interest Rate: 8.5%

New Interest Rate: 8.0%

• Old EMI: ₹34,713
• New EMI: ₹33,458
• Monthly Savings: ₹1,255
• Total Interest Savings Over 20 Years: ₹3,01,200

This example clearly illustrates the long-term impact of even a modest rate cut. Borrowers can leverage these savings to invest, reduce other debts, or contribute to long-term goals like retirement or education funds.

Should You Lower Your EMI or Loan Tenure?

When interest rates are reduced, you have two smart options:

1. Lower Your EMI

Reducing your monthly outflow makes cash flow management easier, especially if you’re dealing with other expenses. This option is ideal if you prefer greater flexibility or need the extra savings for emergencies or investments.

2. Reduce Your Loan Tenure

Keeping your EMI the same but reducing your loan term helps you pay off your loan faster. This can save you a significant amount in total interest over the loan period.

Which One Should You Choose?

Experts suggest that if your finances are stable, reducing the loan tenure is the smarter long-term choice. It accelerates debt freedom and lowers the cumulative interest burden.

Broader Economic Context Behind the Cut

Why did the RBI cut the repo rate now? A combination of domestic and international factors played a role:

• Subdued Inflation: India’s retail inflation has remained within the RBI’s tolerance band of 2% to 6%, giving it room to support growth.
• Global Uncertainty: Slower global demand, U.S. monetary tightening, and geopolitical tensions have impacted trade and capital flows.
• Domestic Growth Concerns: India’s GDP growth, though robust by global standards, is showing signs of moderation. Moody’s Analytics recently revised the 2025 growth forecast downward by 30 basis points (Reuters).

The rate cut is seen as a proactive measure to ensure that the economy remains on a growth trajectory amid external headwinds.

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What Borrowers Should Do Next

Here’s a quick action plan to help you benefit from the rate cut:

Check Your Loan Type

Determine if your current loan is linked to the repo rate or the MCLR. Repo-linked loans tend to pass on rate changes more quickly.

Contact Your Bank

Banks may not automatically apply new rates unless you request it. A simple inquiry can help you initiate the process.

Compare Offers

Use online loan comparison tools to check if other banks are offering significantly lower rates. If they are, a balance transfer could save you thousands.

Avoid Over-Borrowing

A lower EMI can feel like free money—but resist the urge to take on more loans unless necessary. Instead, consider investing the savings or creating a financial buffer.

Review Fixed Deposits

Be aware that falling lending rates may lead to lower FD returns. Consider diversifying your investment portfolio to maintain your income goals.

FAQs On ​RBI Cuts Repo Rate to 6%

Q1: How often does the RBI revise the repo rate?

The RBI’s Monetary Policy Committee (MPC) meets every two months to review and decide on the repo rate based on economic data.

Q2: How soon will the rate cut affect my EMI?

Typically, repo rate changes reflect within 15–30 days for repo-linked loans. Check with your lender for specific timelines.

Q3: What happens if I have a fixed-rate loan?

Fixed-rate loans are unaffected by changes in the repo rate unless the loan has a reset clause. Only floating-rate loans adjust automatically.

Q4: Is switching to a repo-linked loan expensive?

Some banks charge a conversion or administrative fee (₹1,000 to ₹5,000), but the long-term savings often outweigh the one-time cost.

Q5: Will savings account and FD interest rates fall too?

Possibly. With lower lending rates, banks may reduce deposit rates, especially for short-term savings instruments.