RBI Policy Feb 2026: Repo Rate Cut to 6.25% — Impact on Your EMIs & FDs
The RBI Monetary Policy Committee cut the repo rate by 25 basis points to 6.25% on 7 February 2026. Here is what changes for your home loan EMIs, fixed deposits, and savings accounts — and when banks will actually pass on the benefit.
On 7 February 2026, the Reserve Bank of India cut the benchmark repo rate by 25 basis points (bps) to 6.25% — the first reduction since the rate was held steady at 6.50% through 11 consecutive policy meetings. The decision was unanimous across all six MPC members, signalling confidence that inflation is under control and growth needs support.
This matters to you directly: your home loan EMI is linked to repo rate, and your FD returns will come under pressure. Below, we break down exactly how much your EMI could drop, when FD rates will fall, and what actions you should take now.
Data Sources
- RBI Monetary Policy Statement (Feb 2026) — www.rbi.org.in
- SBI EBLR & MCLR Rates (Feb 2026) — sbi.co.in
- RBI Historical Repo Rate Data (Feb 2026) — www.rbi.org.in
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What the RBI Actually Announced
The MPC voted unanimously (6-0) to cut the repo rate by 25bps, bringing it to 6.25%. The standing deposit facility (SDF) rate now stands at 6.00%, and the marginal standing facility (MSF) rate at 6.50%. The policy stance remains "neutral," meaning the RBI is open to further cuts depending on inflation data.
CPI inflation for January 2026 came in at 4.5%, within the RBI's 2-6% tolerance band. GDP growth projections for FY27 were maintained at 6.5%. The RBI cited easing food inflation and global commodity price moderation as factors supporting the cut.
Impact on Home Loan EMIs
How repo rate connects to your EMI
Most home loans issued after October 2019 are linked to the External Benchmark Lending Rate (EBLR), which moves in lockstep with the repo rate. When repo drops 25bps, your EBLR drops 25bps at the next quarterly reset. The key variable is your bank's spread (margin) over EBLR, which stays fixed for the loan tenure.
EMI savings by loan amount
| Loan Amount | Old Rate (8.50%) | New Rate (8.25%) | Monthly Saving | Total Saving (20yr) |
|---|---|---|---|---|
| ₹30 lakh | ₹26,035 | ₹25,586 | ₹449 | ₹1.08 lakh |
| ₹50 lakh | ₹43,391 | ₹42,643 | ₹748 | ₹1.80 lakh |
| ₹75 lakh | ₹65,087 | ₹63,965 | ₹1,122 | ₹2.69 lakh |
| ₹1 crore | ₹86,782 | ₹85,287 | ₹1,495 | ₹3.59 lakh |
Calculations assume 20-year tenure, reducing balance method. Actual EMI depends on bank spread and reset date.
EBLR vs MCLR: When will your EMI actually change?
EBLR-linked loans (most loans since Oct 2019): Banks must reset within the quarterly cycle. If your reset date is April, your EMI drops in April. If March, you get the benefit even sooner. Check your loan statement for the exact reset date.
MCLR-linked loans (older loans): MCLR transmission takes 3-6 months because banks factor in deposit costs and margins beyond repo rate. If you are on MCLR and the gap between your rate and current EBLR-linked rates is 0.3%+, consider switching to an EBLR-linked loan. Most banks do this with a nominal conversion fee of ₹5,000-10,000. Read our Home Loan EMI Guide for a detailed comparison.
Impact on Fixed Deposits
FD rates follow repo rate with a lag of 3-6 months. After the previous rate plateau, many banks offered peak FD rates of 7.25-7.50% for select tenures. These are now expected to decline by 10-25bps over the next quarter.
What should FD investors do?
If you have surplus funds to park in FDs, consider locking in current rates before cuts take effect. A 5-year FD at 7.25% today is better than 7.00% three months later. Use our FD Calculator to compare returns across tenures. For a comprehensive analysis of the best FD options, read our Best FD Rates in India guide.
Transmission Timeline: When Does the Cut Actually Reach You?
| Product | Transmission Speed | Expected Timeline |
|---|---|---|
| EBLR-linked home loans | Full (25bps) | 1-3 months (next quarterly reset) |
| MCLR-linked home loans | Partial (10-20bps) | 3-6 months |
| New FDs | 10-25bps decline | 3-6 months |
| Savings account | Minimal (0-10bps) | 6-12 months, if at all |
| Personal/auto loans (EBLR) | Full (25bps) | 1-3 months |
What Should You Do Now?
1. Check your loan type and reset date
Log in to your bank's portal and check whether your loan is EBLR or MCLR linked, and when the next reset is. If you cannot find it, call your relationship manager or check your original loan sanction letter.
2. Consider switching from MCLR to EBLR
If you are on an MCLR-linked loan with a rate 0.3%+ higher than current EBLR rates, the switch fee (₹5,000-10,000) pays for itself within months. The key advantage is faster transmission of future cuts.
3. Lock in FD rates before they drop
If you have funds earmarked for FDs, locking in now at 7.00-7.25% is better than waiting 3-6 months when rates may be 6.75-7.00%. Consider laddering your FDs across different tenures for liquidity.
4. Use EMI savings for prepayment
When your EMI drops, consider keeping your payments the same and directing the difference (₹750 on a ₹50L loan) toward principal prepayment. Over 15 years, this small redirect could save an additional ₹1-2 lakh in interest. Use our EMI Calculator to model the exact prepayment impact.
Historical Context: RBI Repo Rate Journey
The repo rate peaked at 6.50% in February 2023 after 250bps of cumulative hikes starting from May 2022 (when it was 4.00%). The rate was held steady for 11 consecutive meetings before this cut. The last rate cut cycle (2019-2020) brought the repo from 6.50% to 4.00%, with transmission taking 6-9 months for full pass-through.
Market expectations suggest the RBI may deliver another 25-50bps of cuts in 2026 if inflation remains benign. This would bring the repo rate to the 5.75-6.00% range, potentially reducing home loan rates to 7.75-8.00% — levels last seen in 2022.
NISM XIX-C certified · Partner, Tykhe Ventures (SEBI AIF Cat II) · Founder, RupayWise
Ganesh Kompella is NISM Series XIX-C certified — the certification for Alternative Investment Fund managers — and a Partner at Tykhe Ventures, a SEBI-registered Category II AIF (~$20 M AUM). He's a self-taught engineer who built RupayWise and its 230+-test calculation engine because India's finance tools were built to sell products, not to help you decide. RupayWise is an educational platform — not a SEBI-registered Investment Adviser.
Important: This guide is for informational and educational purposes only. While we strive for accuracy, tax laws, interest rates, and financial regulations change frequently. Always verify current rates and rules with official government sources before making decisions.
Frequently Asked Questions
What is the current repo rate after Feb 2026 RBI policy?
The RBI cut the repo rate by 25 basis points to 6.25% on 7 February 2026. This was the first cut after maintaining the rate at 6.50% for 11 consecutive meetings since February 2023. The standing deposit facility (SDF) rate is now 6.00% and the marginal standing facility (MSF) rate is 6.50%.
How much will my home loan EMI reduce after this rate cut?
For every 25bps (0.25%) reduction in interest rate, you save approximately ₹15 per lakh per month on a 20-year loan. So on a ₹50 lakh home loan, your EMI could reduce by about ₹750 per month. However, the actual reduction depends on when your bank resets its EBLR — for external benchmark-linked loans, the reset happens within the quarter. MCLR-linked loans take longer, typically 6-12 months.
When will banks pass on the repo rate cut to borrowers?
For EBLR-linked loans (most new loans since Oct 2019), banks must pass on the full rate cut within the quarterly reset cycle — typically 1-3 months. For MCLR-linked older loans, transmission takes 3-6 months or longer since MCLR factors in deposit costs and bank margins beyond just the repo rate. Check your loan agreement for the specific reset date.
Will FD rates fall after the repo rate cut?
Yes, FD rates typically decline 3-6 months after a repo rate cut. Banks reduce deposit rates as their cost of borrowing from RBI decreases. Historically, FD rates fall by 10-25bps for every 25bps repo cut, though the exact quantum and timing vary by bank. If you are planning a large FD, consider locking in current rates before the cuts take effect.
Should I prepay my home loan or invest in FDs now?
With repo rate at 6.25% and home loan rates around 8.25-8.50%, the spread is still significant. If your home loan rate is above 8%, prepaying gives you a guaranteed 8%+ return (equal to interest saved). FD rates around 7-7.25% are pre-tax, yielding 4.9-5% post-tax in the 30% bracket. In most cases, prepaying the home loan offers a better risk-adjusted return than FDs. Use our EMI calculator to model the exact savings.
Related Resources
Guides
- EMI Guide — Everything about home loan EMI — calculation, prepayment strategies, and how to save lakhs in interest.
- Best FD Guide — Compare FD rates across top banks and small finance banks. Tax treatment, laddering strategy, and FD vs alternatives.
Disclaimer: This guide is for educational purposes only. Interest rates and monetary policy analysis are based on publicly available RBI data. Actual bank rate changes and timelines may vary. Consult your bank and a qualified financial advisor before making financial decisions. RupayWise does not provide personalized financial advice.