How RBI's 25 bps repo rate hike could impact your loan EMIs

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The Reserve Bank of India (RBI) has hiked the repo rate for the sixth time in a row, by 25 bps to 6.50% with immediate effect

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After the RBI's latest repo rate hike on February 8, banks are expected to raise interest rate in retail loans

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It's true that rise in bank interest rates will impact directly to the new loan borrowers and bank depositors

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Since May last year, the RBI has increased the short-term lending rate by 225 basis points to contain inflation

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At present, the repo rate is at 6.25%. For FY23, RBI's first rate hike was 40 bps in May

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Three consecutive rate hikes to the tune of 50 bps each between June to October

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This would result in higher interest outflow on loans taken from the banks.

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Thus the loans in general will become costlier by 1-2%

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