Banking
Repo Rate
pronounced: [R-e-p-o- -R-a-t-e]
The rate at which RBI lends short-term funds to commercial banks by purchasing securities under repurchase agreements.
Changes in repo rate directly impact lending and deposit rates in the economy.
Example
If the RBI raises the repo rate from 6.5% to 6.75%, banks typically raise their MCLR by 0.25%. A ₹30 lakh home loan @ 8.5% p.a. becomes ₹8.75% p.a., increasing EMI from ₹23,138 to ₹23,732 — an extra ₹7,128/year.
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Last updated: 21 May 2026