Mumbai: Home loan and other borrowers could face higher monthly instalments after six major banks announced increases in their repo-linked lending rates, effective October 8, 2026. The changes follow the Reserve Bank of India’s decision to increase the repo rate by 25 basis points, making borrowing more expensive for customers with floating-rate loans. The RBI’s Monetary Policy Committee (MPC) raised the repo rate from 5.25 percent to 5.50 percent on October 7. This marks the first repo rate increase since February 2023. The central bank also revised its GDP growth forecast for FY27 from 6.7 percent to 7.1 percent. Meanwhile, its inflation projection increased from 5 percent to 5.2 percent.
Six Banks Increase Lending Rates
Following the RBI’s announcement, six banks revised their benchmark lending rates by 0.25 percentage points. Karur Vysya Bank increased its External Benchmark Repo Linked Rate from 8.55 percent to 8.80 percent. Indian Overseas Bank and Punjab National Bank raised their External Benchmark Lending Rates from 8.10 percent to 8.35 percent. Indian Bank increased its Repo Linked Benchmark Lending Rate from 7.95 percent to 8.20 percent. Tamilnad Mercantile Bank revised its Repo Linked Lending Rate from 8.25 percent to 8.50 percent. Bank of Baroda also increased its reported Repo Linked Lending Rate from 5.25 percent to 5.50 percent. Borrowers with floating-rate home loans linked to these benchmarks could see their interest costs increase. Depending on loan terms, banks may raise monthly EMIs or extend repayment periods. Existing fixed-rate borrowers generally remain unaffected until their applicable reset conditions change.
New Rates Effective October 8
All six banks have announced October 8 as the effective date for their revised rates. Borrowers should check their loan agreements and repayment schedules to understand the impact on their monthly payments.
