The Reserve Bank of India (RBI) has given a relief news to the common people, due to which a reduction in loan EMIs may be seen in December. In the recent Monetary Policy Committee (MPC) meeting of RBI, the situation has become clear that there is every possibility of interest rates falling. This decision will directly benefit those taking home, car or personal loan and the EMI burden on their pockets can be reduced.
Why did the RBI Governor give the signal?
Like Federal Reserve Chairman Jerome Powell, now Reserve Bank of India Governor Sanjay Malhotra has also hinted at cutting interest rates in December. After keeping the rates on ‘hold’ for the second consecutive time in October, RBI also indicated softening of inflation estimates. It is clear from this that the repo rate may be reduced in the next meeting to be held in December.
According to experts, RBI may cut the repo rate by 25 basis points (0.25%) in the upcoming December policy. Not only this, there will be a possibility of further cuts in the meeting of February 2026 also. Overall, in this financial year we may see a further reduction in the repo rate by about 50 basis points. Its direct impact will be on the monthly installment i.e. EMI of your home loan, auto loan or personal loan.
What was the big decision taken in the meeting?
The minutes of the October meeting of RBI’s MPC show that Governor Malhotra himself said that there is scope for further reduction in the policy rate, but at the moment its desired effect is not visible, hence it would be better to keep the rate stable for now. However, in view of economic growth and falling inflation, a cut in the policy rate is considered certain in the next few months. RBI had made a major reduction of 25 basis points each in the April and February 2025 meetings and by 50 basis points in June. It has been kept constant at 5.50% in August and October.
Why is December meeting important?
The next MPC meeting is scheduled between 3-5 December 2025, where a decision on possible cuts could be taken. Banking and financial sector experts have their eyes fixed on this meeting, because if there is a cut here then direct relief in EMI is certain.
How much benefit will the common man get?
If there is an overall reduction of 50 basis points in the repo rate, the EMI burden on many loan holders may reduce significantly. For example, on a home loan of Rs 30 lakh, this deduction can give a relief of Rs 7-8 thousand annually. This will make it easier to take loan and may also increase the demand for loans in the market.
Governor Malhotra has said that the main objective of the change in rates is to support economic growth and keep inflation under control. Until inflation is controlled, RBI will implement the cuts at ‘strategic time’. Also, if the conditions become favorable in the coming months, relief can be given to the common people through reduction in policy rates.