RBI Monetary Policy Updates: Reserve Bank of India has announced to increase the Repo Rate, this will directly affect the EMI of your loan. Because banks will pass on the burden of this increase in the repo rate to their customers.
RBI repo rate: The Reserve Bank of India (RBI) has decided to increase the key interest rate i.e. Repo Rate by 0.50 percent. After this decision, the repo rate in the country has increased to 5.40 percent. Significantly, in the last policy announcement made on June 8, RBI had increased the repo rate by half a percentage point. After which the repo rate was increased to 4.90 percent. Experts believe that the Reserve Bank has increased the repo rate to bring down inflation. It is clear from this decision that home loan EMI payers should gear up to pay more. After the increase in the repo rate by the Reserve Bank of India, banks have started increasing the loan rates.
Your EMI will increase
Banks will pass the burden of this increase in repo rate on their customers. This will directly increase your loan installment. That is, along with the home loan, the EMI of your personal loan and even auto loan will also increase. For example, if you have taken a home loan of Rs 20 lakh and the tenure is of 20 years, then your installment will increase from Rs 16,112 to Rs 16,729. Let us know that if the interest rate on the loan increases by .5 percent, what will be the difference on the EMI.
| price | Duration | Rate of interest | Installment (in Rs.) | revised rate | Installment (in Rs.) | Increase (in Rs.) |
| 10 lakh rupees | 20 years | 7.5% | 8,056 | 8% | 8,364 | 308 |
| 20 lakh rupees | 20 years | 7.5% | 16,112 | 8% | 16,729 | 617 |
| 30 lakh rupees | 20 years | 7.5% | 24,168 | 8% | 25,093 | 925 |
According to the Economic Times report, this increase today is the fastest in a decade. Let us tell you that recently, the US central bank Federal Reserve i.e. US Federal Reserve also increased its interest rates. Due to this, it was expected that the RBI may also take a decision to increase the interest rates.
RBI hikes repo rate by 50 basis points to 5.4% with immediate effect
RBI hikes repo rate by 50 basis points to 5.4% with immediate effect pic.twitter.com/axs5EMdvIM
— ANI (@ANI) August 5, 2022
GDP growth forecast kept intact
With the increase in the repo rate by RBI, this rate has become the highest since August 2019. That is, it can be said that the repo rate has now reached the level before the corona epidemic. Let us tell you that RBI had already announced that it will gradually withdraw its liberal stance. RBI has retained the country’s Gross Domestic Product (GDP) growth forecast for the financial year 2023 at 7.2%. RBI Governor said that the Marginal Standing Facility (MSF) and Bank Rates have been increased from 5.15% to 5.65%.
How is the repo rate related to your EMI?
According to economy experts i.e. business experts, the repo rate is also known as the prime interest rate. This repo rate is the rate at which commercial banks borrow money from RBI. Obviously, when lending becomes expensive for banks, they also give loans to customers at higher rates. This simply means that loans like home loans, car loans and personal loans become expensive when the repo rate increases.
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