Loan Rates after the Budget: RBI announces MPC decision on Repo Rate
Kanwar Inder Singh/ royalpatiala.in News/ February 6,2026
The Reserve Bank of India (RBI) Governor Sanjay Malhotra announced that the central bank’s policy rate will remain unchanged at 5.25%. The decision was announced on Friday (February 6, 2026), following the RBI monetary policy committee (MPC) meeting, where the unchanged rate was decided unanimously.
In December, the central bank cut the repo rate by 25 basis points, bringing the benchmark rate down to 125 basis points since February last year.
“The Monetary Policy Committee (MPC) met on the 4th, 5th and 6th of February to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic conditions and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged at 5.25 per cent; consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.50 per cent. The MPC also decided to continue with the neutral stance” said Brij Raj, Chief General Manager, RBI.
For customer protection, the RBI will issue three draft guidelines: one, relating to mis-selling; two, regarding recovery of loans and engagement of recovery agents; and three, on limiting the liability of customers in unauthorised electronic banking transactions. “It is also proposed to introduce a framework to compensate customers up to an amount of ₹25,000 for loss incurred in small-value fraudulent transactions,” said the RBI Governor.
HOW IS REPO RATE LINKED TO LOAN
The repo rate, the interest rate at which the RBI lends money to commercial banks, is directly linked to floating-rate loans, such as home and personal loans. When the RBI increases the repo rate, banks’ borrowing costs rise, leading to higher interest rates and EMIs for borrowers. Conversely, a reduction in the repo rate lowers bank borrowing costs, which can result in lower interest rates and more affordable EMIs for consumers.
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