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Repo rate is the rate at which the Reserve Bank of India (RBI) provides liquidity to banks against eligible securities. A reverse repo transaction moves money in the opposite direction: banks place funds with the RBI, which absorbs liquidity. Neither rate is the interest rate on your home loan, savings account or fixed deposit.
For households, the important question is transmission. A repo move can reach a covered floating-rate loan when the loan’s benchmark resets, while deposit rates are set by each bank and do not have to move one-for-one with repo. The RBI’s latest dated rate table available for this guide was observed at 1:00 p.m. on July 29, 2026; it should not be treated as a fresh observation for October 13, 2026.
Repo rate and reverse repo rate: start with the bank-to-RBI transaction
These are instruments in the RBI’s liquidity framework. The parties are the central bank and regulated financial institutions, not individual borrowers or savers.
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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minute| Point of comparison | Repo | Reverse repo |
|---|---|---|
| Direction of funds | The RBI lends funds to a bank, with eligible securities used in the repo transaction. | A bank places funds with the RBI and receives a return while the RBI absorbs liquidity. |
| Operational purpose | Injects liquidity into the banking system. | Absorbs surplus liquidity from banks. |
| Role in the current framework | The policy repo rate is the middle of the RBI’s Liquidity Adjustment Facility (LAF) corridor. | Fixed-rate reverse-repo operations remain available, but the fixed reverse repo is not the routine LAF floor. |
| Household connection | Can influence a covered floating-rate loan through its contractual benchmark and reset process. | Does not determine the interest paid on your savings account or fixed deposit directly. |
How a repo transaction works
- A bank needs short-term rupee liquidity or wants to manage its funding position.
- It enters a repo operation with the RBI and provides eligible securities under the transaction’s terms.
- The RBI supplies funds at the applicable repo rate.
- At maturity, the bank repurchases the securities and returns the funds plus the repo charge.
The RBI can conduct overnight and term repo auctions under the LAF. The policy repo rate is therefore a central-bank operating rate and a signal for the broader stance of monetary policy, not a rate at which a household can borrow from the RBI.
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How a reverse-repo transaction works
- A bank has funds it wants to place safely or liquidity the RBI wants to absorb.
- The bank lends those funds to the RBI through a reverse-repo operation and receives eligible securities or the agreed collateral arrangement.
- The RBI pays the reverse-repo return when the transaction unwinds.
The word “reverse” describes the direction relative to a repo: in a repo, the RBI is the liquidity provider; in a reverse repo, the RBI is the liquidity taker. A bank’s participation does not turn the reverse-repo rate into the rate paid to its deposit customers.
Where the rates sit in the RBI corridor today
Since the RBI introduced the Standing Deposit Facility (SDF) in April 2022, the SDF rate has been the lower bound of the LAF corridor. The policy repo rate sits in the middle, and the Marginal Standing Facility (MSF) rate forms the upper bound. The SDF lets eligible banks place funds with the RBI without the collateral structure used in a repo.
The fixed reverse repo still exists as an RBI rate, but it is not the standing corridor floor. The RBI can use fixed-rate reverse-repo operations at its discretion. Calling the fixed reverse repo the current LAF floor therefore gives an outdated picture of the framework.
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RBI rates listed on July 29, 2026
The RBI’s current-rates page displayed the following observations at 1:00 p.m. on July 29, 2026. These figures are date-specific; check the RBI page for any subsequent change before making a borrowing or deposit decision.
| Rate | Value | Meaning in the framework |
|---|---|---|
| Policy repo rate | 5.25% | Middle of the LAF corridor and the RBI’s principal policy rate. |
| Standing Deposit Facility (SDF) | 5.00% | Lower bound of the LAF corridor since its introduction in April 2022. |
| Marginal Standing Facility (MSF) | 5.50% | Upper bound of the LAF corridor. |
| Fixed reverse repo rate | 3.35% | An available RBI rate for discretionary fixed-rate reverse-repo operations, not the routine corridor floor. |
A policy announcement can change the repo rate, but the effect on a household product depends on that product’s own contract and pricing. The four numbers above should not be copied into a loan calculator as if they were retail lending or deposit rates.
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How an RBI policy move reaches household rates
The RBI describes the broader mechanism this way:
“Monetary transmission is the process through which monetary policy impulses in the form of policy rate changes by a central bank are transmitted to the entire spectrum of interest rates such as money market rates, bond yields, bank deposit and lending rates and asset prices such as stock prices and house prices.”
That transmission is a chain, not an automatic pass-through switch.
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- Money-market conditions and banks’ short-term funding conditions respond.
- Market-linked benchmarks and each bank’s pricing decisions determine whether, and how much, a customer rate changes.
- The customer’s contract applies the relevant benchmark, spread and reset rule.
- The lender recalculates the payment, remaining term or both according to the contract.
Because each link can operate on a different timetable, a policy move may be visible in one product before another. Fresh loans and fresh deposit offers can also react differently from existing accounts and loans.
What borrowers should know about a repo-rate change
Which floating-rate loans are tied to an external benchmark
Under RBI rules, scheduled commercial banks (excluding regional rural banks) must use an eligible external benchmark for covered new floating-rate personal or retail loans and for covered floating-rate loans to micro and small enterprises. An eligible benchmark can include the RBI’s policy repo rate, specified Treasury-bill yields or another benchmark published by the Financial Benchmarks India (FBIL).
The bank then applies a contractual spread over that benchmark. The spread, benchmark, reset periodicity and other pricing conditions are part of the loan agreement. A loan described generally as “floating rate” is not enough information to predict its response: you need to know which benchmark it uses and when that benchmark is reset.
Why your EMI may not change on the policy-announcement date
Suppose your loan uses the policy repo rate as its external benchmark. A repo-rate change can affect the benchmark immediately in the RBI’s framework, but your lender may apply it only on the next contractual reset date. A monthly, quarterly or other reset schedule can therefore create a lag.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchThe size of the change also depends on the spread and the loan balance. A 25-basis-point repo move does not mean every borrower receives an identical 25-basis-point change in the effective loan rate. “Basis point” means one-hundredth of a percentage point: 100 basis points equals 1 percentage point. The outstanding principal and remaining tenure determine how a rate change translates into a payment amount.
Depending on the agreement and the lender’s recalculation method, the adjustment may appear as a different EMI, a longer or shorter remaining term, or a combination. Do not assume that an unchanged EMI means the rate was unchanged; inspect the amortisation schedule and the effective rate shown on the statement.
What to check in your sanction letter and statement
- Benchmark: identify whether the loan uses the policy repo rate, a Treasury-bill yield, an FBIL benchmark or another permitted reference.
- Spread: find the fixed or otherwise defined margin added to the benchmark.
- Reset date and frequency: note the date on which the lender applies a benchmark change and how often it can reset.
- Outstanding principal: a rate change on a nearly repaid loan has a different rupee effect from the same change at the start of a long loan.
- Remaining term and recalculation rule: verify whether the contract changes the EMI, the tenure or both.
- Effective rate history: compare the rate before and after a reset instead of relying only on the RBI announcement.
Historical pass-through was not one-for-one
RBI data show why a policy move cannot be converted into a universal EMI forecast. From May 2022 to August 2024, the policy repo rate rose cumulatively by 250 basis points. Over that period, weighted average lending rates on fresh rupee loans rose by 190 basis points, while weighted average lending rates on outstanding rupee loans rose by 119 basis points.
| Measure | Change reported by the RBI | Period and qualification |
|---|---|---|
| Policy repo rate | +250 basis points | Cumulative increase from May 2022 to August 2024. |
| Weighted average lending rate on fresh rupee loans | +190 basis points | Same May 2022–August 2024 period. |
| Weighted average lending rate on outstanding rupee loans | +119 basis points | Same May 2022–August 2024 period. |
These are observations from that tightening cycle, not a promise about the next cut or increase. They show that loan category, repricing timing and the stock of existing loans affect transmission.
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A practical borrower response after an RBI announcement
- Read the lender’s notice or statement and record the benchmark, spread, effective rate and next reset date.
- Ask the lender for a revised amortisation schedule if the rate has reset.
- Check whether the contractual rule changes the EMI, tenure or both, and whether you can request a different combination.
- Compare the revised total interest cost with alternatives only after including any charges and the remaining term.
- Do not refinance or make a large prepayment solely because a headline rate changed; base the decision on your actual outstanding balance and contract.
What savers should know about deposits
The reverse repo is not your savings-account return
When a bank places money with the RBI in a reverse-repo operation, the bank—not its depositors—earns the RBI-set return. Your savings account or fixed deposit is a separate contract between you and the bank. The bank sets that deposit rate under its product terms and may change new offers without changing every existing account.
Fresh deposits and existing deposits can move differently
A fixed-tenor deposit generally keeps the rate agreed at booking until maturity, subject to the product’s terms. A new deposit opened after a bank changes its card rates can therefore carry a different return from an older deposit at the same bank. Savings-account rates may be variable under the account’s conditions, while a term deposit’s rate is tied to its agreed tenure and payout structure.
The repo rate can influence banks’ funding and pricing environment, but there is no rule that requires a deposit rate to rise or fall by the same number of basis points. Competition, the bank’s funding needs and the specific product decision are reflected in the quoted offer.
Historical deposit data illustrate the difference
For May 2022 to August 2024, the RBI reported that weighted average domestic term-deposit rates increased by 243 basis points for fresh deposits and 190 basis points for outstanding deposits. In the first half of 2024-25 through August 2024, outstanding deposit rates increased by 4 basis points while fresh deposit rates moderated by 16 basis points.
| Deposit measure | Reported movement | Period and qualification |
|---|---|---|
| Fresh domestic term-deposit rates | +243 basis points | May 2022–August 2024. |
| Outstanding domestic term-deposit rates | +190 basis points | May 2022–August 2024. |
| Outstanding deposit rates | +4 basis points | First half of 2024-25 through August 2024. |
| Fresh deposit rates | −16 basis points | First half of 2024-25 through August 2024. |
Those figures are historical banking-system averages, not current quotations from a particular bank. They demonstrate why “repo cut equals immediate FD-rate cut” is too simple.
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How to compare a new savings or FD offer
- Record the quoted rate, tenure and whether the rate applies only to a new booking or also to renewals.
- Check the payout choice—monthly, quarterly, annual or cumulative—and compare like with like.
- Read the premature-withdrawal, renewal and maturity instructions before placing funds.
- For a savings account, confirm whether the rate is variable and which balance conditions apply.
- If a deposit is close to maturity, compare the bank’s current fresh-deposit offer rather than assuming the old rate will continue.
Common misconceptions, corrected
“The RBI lends directly to me at the repo rate.”
No. Repo operations are between the RBI and banks. A household loan carries the lender’s benchmark, spread, risk pricing and contractual terms.
“The reverse repo is the interest rate I earn on my savings account.”
No. It is the rate associated with banks placing funds with the RBI. Your bank sets your deposit rate separately.
“Every repo-rate change changes every EMI immediately.”
No. Only loans whose contracts are exposed to the relevant benchmark will respond, and the contractual reset date controls timing. Other floating-rate loans may use a different benchmark, while fixed-rate loans may not reset at all.
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“The fixed reverse repo is still the LAF corridor floor.”
Not in the current framework. Since April 2022, the SDF is the lower bound; the fixed reverse repo remains available for discretionary operations.
“A rate cut always makes a new FD cheaper for the bank and therefore lowers every existing FD.”
No. Fresh offers and outstanding deposits can move differently, and a fixed-tenor deposit normally follows the rate and terms agreed at booking until maturity.
A decision framework for borrowers and savers
| If you are… | Look at first | Do not assume |
|---|---|---|
| A borrower with a new floating-rate retail or personal loan | External benchmark, spread, reset date, outstanding principal and remaining term. | That the policy announcement date is your EMI-change date. |
| A borrower with an older floating-rate loan | The benchmark named in the sanction terms and the lender’s reset notice. | That every floating loan uses the policy repo rate. |
| A fixed-rate borrower | Whether and when the contract permits a change. | That a repo move automatically reprices the loan. |
| A saver considering a new FD | Current rate for the exact tenure, payout, renewal and withdrawal conditions. | That the reverse-repo rate is your return. |
| A saver holding an existing FD | Its maturity date and contracted rate. | That a new bank offer changes the existing deposit before maturity. |
The reliable sequence is: identify the RBI rate and date, identify your bank product’s benchmark or deposit terms, then apply the contract’s reset or maturity rule. This keeps a central-bank headline separate from the retail rate that actually appears on your statement or deposit advice.
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