Archive · 10 Dec 2025
RBI Cuts Repo Rate to 5.25% in 2025
The Reserve Bank of India has cut the repo rate, which is the rate at which banks borrow money from the RBI, to 5.25%.
This is the fourth cut in 2025, making a total reduction of 1.25%.
The idea is to make loans cheaper for people.
However, banks and non-banking financial companies (NBFCs) often take time to pass on these benefits to borrowers.
Some borrowers, like Akhil Surampally, have not seen any reduction in their home loan interest rates despite the cuts.
Banks may increase their margins, which means they charge more interest above the benchmark rate, reducing the benefit of the rate cuts.
Borrowers can write to their lenders, negotiate for lower rates, or even switch to another bank if they are not getting the benefits.
The RBI has also introduced floating rate savings bonds, which offer interest rates linked to government savings schemes.
These bonds are safe and can be a good investment for individuals.
The RBI has cut the repo rate to 5.25% in December 2025, the fourth cut in the year, totaling 125 basis points.
Banks and NBFCs often delay passing on the benefit of rate cuts to home loan borrowers.
Borrowers can take steps such as writing to their lenders, negotiating for lower rates, or switching to another bank if they do not see a reduction in interest rates.
Banks may increase their margins, reducing the benefit of repo rate cuts for borrowers.
The RBI has introduced floating rate savings bonds, offering interest rates linked to government savings schemes, providing a safe investment option for individuals.
- Who
- Reserve Bank of India (RBI), Banks, NBFCs, Home Loan Borrowers
- What
- RBI cuts repo rate to 5.25%, impacting home loan interest rates
- When
- December 8, 2025
- Where
- India
- Why
- To stimulate economic growth and reduce borrowing costs for consumers
Borrowers
Banks/NBFCs
Rate Reduction
Borrowers
Borrowers expect immediate reduction in home loan interest rates following RBI's repo rate cuts.
Banks/NBFCs
Banks and NBFCs often delay passing on the benefit of rate cuts to borrowers.
Margin Increase
Borrowers
Borrowers argue that increased margins by banks negate the benefits of repo rate cuts.
Banks/NBFCs
Banks justify higher margins based on borrower risk and profit expectations.
Transmission of Rate Cuts
Borrowers
Borrowers expect full transmission of repo rate cuts to their loan interest rates.
Banks/NBFCs
Banks may not fully transmit rate cuts due to various factors like market competition and pricing strategy.
- Repo Rate
- 5.25%
- Total Rate Cuts in 2025
- 125 basis points
- Impact on Home Loans
- Reduction in EMIs or loan tenure
- Borrower Action
- Write to financier, negotiate, or switch lenders
- Margin
- Additional interest charged above benchmark rate
- Rate Transmission Delay
- 3 to 6 months
- Loan Benchmarks
- BPLR, MCLR, EBLR, RLLR, Base Rate
- Premature Redemption
- Allowed for individuals aged 60 and above under certain conditions
Sources
Best fixed deposit rates: Top 5 FD plans with up to 8.85% interest per annum
RBI floating rate savings bonds explained: Returns, eligibility and key rules
What to do when banks refuse to reduce home loan interest rates
RBI rate cut: Time to rethink your home loan strategy?
