RBI raises repo rate to 5.50%: NRI home loans get costlier, deposit rates may rise more slowly

NRIs repaying a floating-rate home loan in India will pay more after the Reserve Bank of India raised its policy rate for the first time since February 2023. The Monetary Policy Committee (MPC), which met from 5 to 7 October, voted unanimously to lift the repo rate by 25 basis points to 5.50%.

What changed

With the repo rate at 5.50%, the standing deposit facility rate is now 5.25%, and the marginal standing facility rate and the Bank Rate are 5.75%. The MPC also moved its stance from neutral to “calibrated tightening”. Business Standard reported that the stance change was backed 4-2, with external members Nagesh Kumar and Ram Singh preferring to stay neutral.

The resolution says the stance means rate cuts are “off the table in the near term”, and the next move can only be a hike or a pause. The RBI now projects consumer inflation at 5.2% for 2026-27. The next MPC meeting is on 2 to 4 December 2026.

Who it affects

Borrowers first. Business Standard reported that Bank of Baroda, Punjab National Bank, Indian Bank, Indian Overseas Bank, Bank of India and RBL Bank raised their repo-linked lending rates by 25 basis points. Indian Bank’s rate went from 7.95% to 8.20% from 8 October, and PNB’s from 8.10% to 8.35%. New repo-linked loans cost more at once. Existing ones are usually repriced within about 90 days.

Depositors may wait longer. The Governor’s statement shows net inflows into non-resident deposits of $119.2 billion in April to August 2026, against $5.6 billion a year earlier. The statement also notes that rates on fresh domestic term deposits fell 28 basis points in July and August, which it links to the FCNR(B) money. Business Standard reported that banks flush with FCNR(B) funds may be slow to raise deposit rates, though rates on fresh deposits could firm up.

What it means for you

1. If you have a home loan in India, ask your bank which benchmark it uses and when it next resets. Your bank will decide whether the EMI or the tenure goes up.
2. NRE and NRO fixed deposit rates are set by each bank. Compare offers before you book or renew. The RBI’s special relaxation on long NRE and FCNR(B) deposit rates ended on 31 August.
3. Check the bank’s own rate card before acting. This report is general information, not financial advice.