RBI October Policy: The Reserve Bank of India (RBI) has once again chosen to maintain the repo rate at 5.5%, keeping home loan borrowers’ EMIs unchanged for now. The announcement came after the Monetary Policy Committee (MPC) meeting that concluded on October 1, 2025, led by RBI Governor Sanjay Malhotra.
The MPC voted unanimously to keep the policy rate steady, with the Standing Deposit Facility (SDF) at 5.25%, and both the Marginal Standing Facility (MSF) and the Bank Rate fixed at 5.75%. The RBI has also maintained a neutral stance, signaling that it will continue balancing inflation control with economic growth.
Comparison: Repo-Linked vs MCLR vs Base Rate Loans
| Loan Type | How It Works | Impact of RBI’s Decision | Pros | Cons |
|---|---|---|---|---|
| Repo-Linked Loans (EBLR) | Directly linked to RBI’s repo rate | EMIs remain unchanged at 5.5% repo | Transparent, quick rate changes | Can rise quickly if RBI hikes repo |
| MCLR Loans | Based on bank’s internal cost of funds | Changes only when bank resets MCLR | Slightly stable than repo-linked | Slower transmission, less |
| Base Rate Loans | Older benchmark system | No immediate change, depends on bank | Predictable, older borrowers may still be on it | Outdated, not borrower-friendly |
Why This Decision Matters
The timing of this status quo is significant, especially with the festive season approaching. Stable interest rates bring relief to both homebuyers and the real estate sector. Borrowers benefit because their EMIs remain predictable. Developers gain confidence to plan and deliver projects on time. First-time buyers feel encouraged to make long-awaited property purchases.
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Manju Yagnik, Sr. VP at NAREDCO Maharashtra, noted that this consistency “encourages purchase decisions and supports developers with better planning.” Similarly, Dharmendra Raichura from Ashar Group emphasized that stable borrowing costs “help ensure timely project delivery and sustained investments.”
RBI’s Recent Policy Moves
Earlier this year, the RBI had reduced repo rates by 100 basis points in three phases (since February 2025) to ease borrowing and support consumption. However, in its August 2025 meeting, it paused further cuts, choosing to wait and assess the impact of global trade tensions and U.S. tariffs.
The latest decision to keep rates unchanged reflects a cautious but supportive approach towards India’s economic growth.
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Impact on Home Loan Borrowers
- Existing Borrowers: If your loan is linked to the repo rate (EBLR system), your EMI will stay the same. This is good news as any hike would have meant higher repayments.
- New Borrowers: For new home loan seekers, this is a stable time to compare offers. Floating repo-linked rates remain steady, but if you want protection against future hikes, a fixed-rate option could be considered.
- Borrowers on Older Loan Systems: If your home loan is still linked to Base Rate or MCLR, it may be wise to review your agreement. Shifting to a repo-linked loan provides better transparency and faster transmission whenever RBI adjusts policy rates
What Lies Ahead?
The RBI holds six MPC meetings each year, reviewing inflation, growth, and global market conditions. While this pause means relief for borrowers now, future policy moves will depend on: Inflation trends in food and fuel prices, Global interest rate changes, Domestic investment and consumption patterns.
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Final Takeaway on RBI October Policy
The RBI’s decision to hold the repo rate at 5.5% provides much-needed stability for home loan borrowers during the festive season. Existing borrowers: No change in EMIs. New borrowers: Good time to compare offers and consider fixed-rate safety. MCLR/Base rate borrowers: Time to review and think about shifting to repo-linked loans