In short: On 7 October 2026 the Reserve Bank of India raised the repo rate by 0.25 percentage points, from 5.25% to 5.50%. It also changed its stance from “neutral” to “calibrated tightening”. If your business loan has a floating rate linked to the repo rate, your interest cost may rise slightly at the next reset.
What the RBI decided
- Repo rate: 5.50% (up 25 bps). The Standing Deposit Facility is at 5.25%, and the Marginal Standing Facility and Bank Rate are at 5.75%.
- Why: inflation is rising. CPI inflation was 4.8% in August, and the RBI now projects 5.2% for 2026–27, pushed up by food and fuel prices.
- Growth: the RBI still projects 7.1% GDP growth for 2026–27.
- What next: rate cuts are off the table for now. The next policy meeting is on 2–4 December 2026.
What it means for you
Since October 2019, banks have had to link new floating-rate loans to MSMEs to an external benchmark, usually the repo rate. When the repo rate rises, banks can pass it on at the loan’s next reset date, which comes at least once every three months.
Example: on a ₹10 lakh loan over 5 years, a rise from 10% to 10.25% adds roughly ₹120 to the monthly EMI. Banks sometimes extend the tenure instead of raising the EMI.
Worth doing now:
- Check your sanction letter to see which benchmark your loan follows and when it resets.
- If you are planning to borrow, compare the total cost of a few lenders’ quotes, not just the headline rate.
- Look at whether a CGTMSE guarantee can help you avoid collateral.
Related: Funding options for women founders, compared · CGTMSE collateral-free loans
Sakhi Sangini News Desk · 31 October 2026. Facts are as reported on the dates shown; confirm with the official source before you act. General information, not legal, tax or financial advice.
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