The current RBI repo rate is 5.25%, as decided in the June 2026 MPC meeting. The central bank chose to leave rates unchanged and continue with a neutral stance.
In simple terms, the repo rate is the rate at which banks borrow money from the RBI. A lower repo rate can help reduce loan interest rates and EMIs, while a higher repo rate can increase borrowing costs.
Other important rates include:
- SDF Rate: 5.00%
- MSF Rate: 5.50%
- Bank Rate: 5.50%
The next monetary policy review is expected between 3 and 5 August 2026.
What Is the Current Repo Rate in 2026?
The RBI’s current repo rate is 5.25%. In its June 2026 Monetary Policy Committee (MPC) meeting, the central bank decided to keep the rate unchanged and maintained a neutral policy stance.
The RBI last changed the repo rate in December 2025, cutting it from 5.50% to 5.25%. Since then, it has chosen to keep rates unchanged while monitoring inflation and economic conditions in India and around the world. These decisions are taken by the six-member MPC led by RBI Governor Sanjay Malhotra.
Here are the important RBI policy rates currently in effect as of June 2026:
| Rate | Current Value (June 2026) |
| Repo Rate | 5.25% |
| Standing Deposit Facility (SDF) | 5.00% |
| Marginal Standing Facility (MSF) | 5.50% |
| Bank Rate | 5.50% |
| Reverse Repo Rate | 3.35% |
| Cash Reserve Ratio (CRR) | 3.00% |
| Statutory Liquidity Ratio (SLR) | 18.00% |
These rates together form the framework the RBI uses to control money supply and inflation in the economy.
What Is the Repo Rate?
The word “repo” stands for “Repurchase Agreement” or “Repurchasing Option.” The repo rate is the rate of interest that banks pay when they borrow short-term funds from the RBI.
When a bank runs short of money for a short period, it borrows from the RBI by selling government securities to the RBI, with a promise to buy them back later at a fixed price. The extra amount the bank pays to buy them back is the interest, and that interest rate is the repo rate. This borrowing is usually for a very short time, often just overnight.
Because the repo rate is the cost of money for banks, it directly affects the interest rates banks charge you on loans. So when you hear “RBI cut the repo rate,” it usually means loans may become cheaper soon.
What Is the Reverse Repo Rate?
The reverse repo rate is the opposite of the repo rate. It is the interest rate at which banks park their extra money with the RBI and earn interest on it.
If banks have more money than they currently need, they can deposit it with the RBI and earn interest through the reverse repo rate. This allows the RBI to reduce excess liquidity in the economy and help keep inflation under control.
As of 2026, the reverse repo rate is 3.35%. The RBI now mostly uses the Standing Deposit Facility (SDF) instead of the old reverse repo to absorb extra money from banks. So while the reverse repo rate still officially exists, the SDF has become the main tool for this job since April 2022.
What Is the Standing Deposit Facility (SDF)?
The Standing Deposit Facility (SDF) is a tool the RBI introduced in April 2022 to absorb extra cash from banks without giving them any government securities in return. This makes it simpler and more flexible than the old reverse repo.
Key points about the SDF:
- Banks can park their surplus money with the RBI under the SDF and earn the SDF rate (currently 5.00%).
- It does not require any collateral (securities) to be exchanged.
- It now acts as the main way the RBI removes excess liquidity from the system.
- The SDF rate forms the floor of the policy corridor the lowest level around which short-term rates move.
The SDF is the RBI’s modern, easy tool to mop up extra money from banks and keep liquidity under control.
Repo, SDF, MSF and Bank Rate: The Policy Corridor Explained
The RBI uses several rates that work together like a corridor (a band) around the repo rate. Understanding this helps you see the full picture:
- Repo Rate (5.25%): The middle of the corridor — the main rate at which RBI lends to banks.
- SDF (5.00%): The floor of the corridor — where banks park extra money safely.
- MSF (5.50%): The ceiling of the corridor — an emergency window where banks borrow extra money beyond their normal limit, at a slightly higher rate.
- Bank Rate (5.50%): A longer-term lending rate by the RBI, usually moving with the MSF.
So the corridor in 2026 runs from a floor of 5.00% (SDF) to a ceiling of 5.50% (MSF), with the repo rate of 5.25% in the middle. This narrow corridor keeps short-term interest rates stable and predictable.
How the Repo Rate Affects Your Loan EMI
The repo rate can directly affect your loan EMIs, especially if your loan has a floating interest rate. Since the RBI made it a rule, most new floating-rate retail loans (home loans, car loans, personal loans for individuals and MSMEs) are linked to an External Benchmark Lending Rate (EBLR), which is usually the repo rate. This means:
- When the RBI cuts the repo rate, your loan interest rate falls, and your EMI goes down (or your loan tenure shortens).
- When the RBI raises the repo rate, your loan interest rate rises, and your EMI goes up.
EBLR-linked loans react fast to repo rate changes often within a couple of months. Older MCLR-linked loans react more slowly. So if you have a home loan, a repo rate cut is good news, because your EMI usually drops soon after.
How the Repo Rate Affects FD and Savings Returns
The repo rate does not only affect loans it also affects the interest you earn on deposits:
- When the repo rate is high, banks usually offer better FD (fixed deposit) interest rates, so savers earn more.
- When the repo rate is low (or falling), FD rates tend to come down, so returns on new deposits reduce.
Lower rates help borrowers but may reduce FD earnings. A long-term FD can help you secure a higher interest rate before rates fall further.
Why Does the RBI Change the Repo Rate?
The RBI changes the repo rate mainly to control inflation and support economic growth. It is a balancing act:
- To fight high inflation: The RBI raises the repo rate. Loans become costlier, people and businesses borrow and spend less, demand cools, and prices come down.
- To boost a slow economy: The RBI cuts the repo rate. Loans become cheaper, people borrow and spend more, businesses invest, and growth picks up.
The RBI tries to balance two goals: keeping inflation under control and supporting economic growth. Its official inflation target is 4%, with an acceptable range of 2% to 6%. Since inflation has remained relatively low and growth has been strong, the RBI reduced interest rates during 2025 and is now holding the repo rate at 5.25% while monitoring future developments.
RBI Repo Rate History (2024–2026)
The RBI ran one of its most active easing cycles in 2025:
| Date | Repo Rate | Change |
| 2024 (most of the year) | 6.50% | Unchanged (long pause) |
| February 2025 | 6.25% | Cut by 0.25% |
| April 2025 | 6.00% | Cut by 0.25% |
| June 2025 | 5.50% | Cut by 0.50% |
| December 2025 | 5.25% | Cut by 0.25% |
| February 2026 | 5.25% | Unchanged |
| April 2026 | 5.25% | Unchanged |
| June 2026 | 5.25% | Unchanged |
During 2025, the RBI reduced the repo rate by a total of 125 basis points (1.25%), lowering it from 6.50% to 5.25%. Since December 2025, the rate has remained unchanged, reflecting the central bank follows a data-driven policy approach.
What Is RBI Monetary Policy?
The RBI uses monetary policy to control inflation, manage the flow of money, and support economic growth. The repo rate is its main policy tool and plays a major role in determining interest rates in the economy.
The repo rate is set by the six-member MPC. The committee meets every two months to review the economy and decide whether interest rates should be changed.
There are two broad types of monetary policy:
- Expansionary (easy) policy: Lower rates to boost growth and spending.
- Contractionary (tight) policy: Higher rates to control inflation.
When you hear the RBI announce a “stance” along with the rate — like neutral, accommodative, or withdrawal of accommodation — that stance is a signal about where rates may go next.
What Is the Monetary Policy “Stance”?
Along with the rate, the RBI announces a stance, which hints at its future direction. The common stances are:
- Accommodative: The RBI is open to cutting rates to support growth.
- Neutral: The RBI can move either way — cut or hike — depending on data. (This is the current 2026 stance.)
- Withdrawal of accommodation / Tightening: The RBI is leaning towards higher rates to control inflation.
In 2026, The RBI is currently taking a neutral approach. It will decide future interest rate changes based on economic data and inflation trends.
CRR and SLR: Two More Important RBI Tools
Apart from the repo rate, the RBI uses two more tools to manage how much money banks can lend:
- Cash Reserve Ratio (CRR) — 3.00%: The share of a bank’s deposits it must keep with the RBI as cash. A lower CRR leaves banks with more money to lend. In 2025, the RBI cut CRR from 4% to 3%, releasing a large amount of money into the system.
- Statutory Liquidity Ratio (SLR) — 18.00%: The share of deposits a bank must keep in safe assets like government securities, gold, or cash before lending.
These two ratios work alongside the repo rate. By adjusting CRR and SLR, the RBI can inject or drain liquidity without even touching the repo rate.
Repo Rate vs Reverse Repo Rate
These two are often confused, so here is a simple side-by-side:
| Point | Repo Rate | Reverse Repo Rate |
| Meaning | RBI lends to banks | Banks park money with RBI |
| Direction of money | RBI → Banks | Banks → RBI |
| Current value (2026) | 5.25% | 3.35% |
| Purpose | Inject money / set lending cost | Absorb extra money |
| Effect of increase | Loans costlier | Banks park more, lend less |
repo = RBI lending to banks, and reverse repo = banks lending to RBI. Today, the RBI mainly uses the SDF rather than the reverse repo to absorb money.
RBI MPC Meeting Schedule 2026
The RBI’s Monetary Policy Committee meets six times in a financial year to review and decide the repo rate. After the June 2026 meeting (which held the rate at 5.25%), the next MPC meeting is scheduled for 3–5 August 2026.
Each meeting is closely watched by home-loan borrowers, businesses, investors, and the stock and bond markets, because any change in the repo rate quickly affects EMIs, deposit rates, and market sentiment. Keeping an eye on these meeting dates helps you plan your loans and investments better.
Common Myths About the Repo Rate
There is a lot of confusion about the repo rate. Here are some common myths and the truth:
- A repo rate cut instantly lowers my EMI. Truth: It lowers EMIs on EBLR-linked loans fairly quickly, but MCLR-linked loans take longer, and banks decide the exact timing.
- The repo rate is the same as the interest rate on my loan. Truth: Your loan rate is the repo rate plus the bank’s margin (spread), so it is always a bit higher than the repo rate.
- Only borrowers are affected. Truth: Savers are affected too FD and savings returns move with rates.
- The RBI changes the rate any time it wants. Truth: The rate is reviewed at scheduled MPC meetings, six times a year.
- A lower repo rate is always good. Truth: It helps borrowers but can reduce FD income and, if overdone, push up inflation.
How to Use Repo Rate News to Your Benefit
- Home loan borrowers: If you expect rate cuts, a floating-rate (EBLR-linked) loan can benefit you, as your EMI falls with the repo rate.
- If rates are likely to rise: A fixed-rate loan can protect you from higher EMIs.
- FD investors: If rates are expected to fall, lock into a longer FD now to keep a higher rate.
- Check your loan benchmark: Find out if your loan is EBLR or MCLR linked — EBLR reacts faster to repo changes.
- Watch MPC dates: Plan big borrowing or deposit decisions around the MPC meeting outcomes.
These small, informed steps can save you money on loans and improve your returns on savings.
How the Repo Rate Affects the Economy and Stock Market
The repo rate affects the entire economy, not just loans and savings. Here are some of its major effects:
- Spending and demand: Lower repo rates encourage borrowing and spending, while higher repo rates make borrowing more expensive and slow spending.
- Inflation: Higher rates help reduce inflation, while lower rates can increase inflation if demand rises too much.
- Stock market: Rate cuts are often good for the stock market because they make borrowing cheaper. Banking, real estate, and auto stocks usually react the most.
- Bond market: If new bonds offer lower interest rates, investors often prefer existing bonds that pay higher returns. This higher demand can increase the price of those older bonds.
- Rupee and foreign investment: Interest rates can affect foreign investment and, as a result, the value of the Indian rupee.
So a single repo rate decision can move home-loan EMIs, FD returns, share prices, bond values, and even the currency which is why every MPC meeting gets so much attention.
Repo Rate vs Bank Rate: What’s the Difference?
People often mix up the repo rate and the bank rate, since both are rates at which the RBI lends to banks. Here is the simple difference:
| Point | Repo Rate | Bank Rate |
| Security involved | Yes — banks give government securities | No securities exchanged |
| Loan duration | Very short (often overnight) | Usually longer term |
| Current value (2026) | 5.25% | 5.50% |
| Main use | Day-to-day liquidity management | Longer-term lending signal |
The repo rate involves a sale-and-buyback of securities for short-term needs, while the bank rate is a plain longer-term lending rate with no securities. Both influence how much interest banks finally charge their customers.
Conclusion
The repo rate affects almost every part of the economy, from home loan EMIs and fixed deposit returns to business investment and inflation. Currently, the RBI has kept the repo rate at 5.25% and is taking a neutral approach while monitoring economic conditions.
The key thing to remember is that lower repo rates usually make loans cheaper, while higher repo rates make borrowing more expensive. Understanding these changes can help you plan your finances more effectively and make informed decisions about loans, savings, and investments.
Frequently Asked Questions (FAQs)
1. What is the current repo rate in 2026?
As of the June 2026 MPC meeting, the current repo rate is 5.25%, kept unchanged with a neutral stance. It has been at this level since December 2025.
2. What is the repo rate in simple words?
The repo rate is the interest rate at which the RBI lends short-term money to commercial banks, usually overnight, against government securities. It is the main tool to control inflation and liquidity.
3. What is the difference between repo rate and reverse repo rate?
Repo rate is the rate at which the RBI lends to banks (5.25%). Reverse repo rate is the rate at which banks park money with the RBI (3.35%). One injects money, the other absorbs it.
4. What is the SDF (Standing Deposit Facility)?
The SDF is the RBI’s tool (since April 2022) for banks to park surplus money without giving securities. The current SDF rate is 5.00%, and it acts as the floor of the policy corridor.
5. What is the current SDF, MSF, and Bank Rate in 2026?
The SDF is 5.00%, while the MSF and Bank Rate are both 5.50%. These form the floor and ceiling of the policy corridor around the repo rate.
6. How does the repo rate affect my home loan EMI?
Most floating-rate loans are linked to the repo rate (EBLR). When the RBI cuts the repo rate, your EMI usually falls; when it raises the rate, your EMI rises.
7. Why does the RBI change the repo rate?
To balance inflation and growth. It raises the rate to control high inflation and cuts it to boost a slow economy.
8. Who decides the repo rate in India?
The six-member Monetary Policy Committee (MPC) of the RBI, headed by the Governor (currently Sanjay Malhotra), decides the repo rate after reviewing the economy.
9. What is the RBI’s inflation target?
The RBI aims to keep CPI inflation at 4%, within a comfort band of 2% to 6%, while supporting growth.
10. When is the next RBI MPC meeting?
After the June 2026 meeting, the next MPC meeting is scheduled for 3–5 August 2026.
11. What is the current CRR and SLR?
The CRR is 3.00% and the SLR is 18.00% as of 2026. These decide how much money banks must keep aside before lending.
12. What does a “neutral” policy stance mean?
A neutral stance means the RBI can move rates either way cut or hike depending on upcoming inflation and growth data, without committing to a direction in advance.
13. Does a repo rate cut also lower FD interest rates?
Often yes. When the repo rate falls, banks usually reduce FD rates too, so returns on new deposits may go down.
14. How often does the repo rate change?
The MPC reviews the rate six times a year (about every two months). The rate may be cut, raised, or kept unchanged at each meeting.
15. Who is the current RBI Governor deciding the repo rate?
The current RBI Governor is Sanjay Malhotra, who heads the six-member Monetary Policy Committee that decides the repo rate.
16. What is the EBLR and how is it linked to the repo rate?
EBLR stands for External Benchmark Lending Rate. Most new floating-rate retail and MSME loans are linked to it, and it is usually tied to the repo rate so repo rate changes pass quickly into your loan rate.
17. Is a high repo rate good or bad?
It depends on who you are. A high repo rate is good for savers (better FD returns) but costly for borrowers (higher EMIs). A low repo rate is the opposite.
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