RBI hikes repo rate. How will this impact your loan EMIs?

In its first Monetary Policy statement of 2023, the central bank raised the policy repo rate by 25 basis points to 6.5%.

Updated on: Jun 8, 2023, 10:56:01 IST

By HT News Desk, New Delhi

Prefer HTon Google

Share via

Copy link

In its first Monetary Policy statement of 2023, the Reserve Bank of India (RBI) on Wednesday hiked the policy repo rate by 25 basis points to 6.5%. This was the sixth straight hike to the repo rate, which, in December last year, was raised by 35 basis points to 6.25%.

The RBI on Wednesday increased repo rate by 25 bps to 6.5%. (HT_PRINT)

Also Read | RBI hikes repo rate to 6.5%, real GDP growth at 6.4% for 2023-24

The decision to raise the repo rate was approved by a 4-2 majority by the central bank's Monetary Policy Committee (MPC), said RBI governor Shaktikanta Das, who announced decisions made by the committee, which met for three days starting February 6.

Also Read | RBI repo rate hike: How will it affect fixed deposits (FDs)?

But, how does repo rate increase the common man? Here's how:

Loan EMIs to rise: The rise in repo rate – it is the interest rate charged by RBI when commercial banks borrow from it – will have a direct impact on loan borrowers and bank depositors. Now, banks too will raise the interest rate on retail loans, and usually also increase the tenure of the loan; the higher the remaining tenure of the loan, the higher the EMI.

Also Read | What are monetary policy, repo rate and reverse repo rate?

Overall, since May 2022, the repo rate has been hiked by 250 basis points.

ABOUT THE AUTHOR
HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

Stay updated with the latest Business News on Petrol Price, Gold Rate, Silver Rates, Diesel Prices along with Income Tax Calculator