Post the 7th February 25 basis point cut in repo rate to 6.25%, the Reserve Bank of India (RBI) announced a second consecutive rate cut in 2025 by another 25 basis points, bringing it down to 6%. This is the first back-to-back rate cut in five years, signaling RBI’s continued push to support economic growth amidst global uncertainty. The April 2025 Repo Rate cut announced by RBI Governor Sanjay Malhotra can impact you and the economy in the following ways:
- Cheaper Loans for Banks i.e banks can borrow money at lower interest
- Lower EMIs for you on your home/car/personal loan EMIs
- Lower rates mean more spending and investments, which ultimately boosts the economy
- Potential Inflation control as RBI tweaks the rate to maintain a healthy economy
| Date | Repo Rate | Change |
| February 2025 | 6.25% | -0.25% |
| April 2025 | 6.00% | -0.25% |
Let’s find out more about how the April 2025 Repo Rate cut could impact you.
What Is the Repo Rate and How Does It Impact You?
Repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. Simply put, if banks are short on cash, then they can "borrow" from the RBI — kind of like taking a loan themselves.
Here, the repo rate is the interest they pay for that loan. So, what happens when the RBI cuts the repo rate?
Let’s understand this with a simple example: Imagine if bank A is getting a loan from the RBI at 6.5%. If that rate is cut to 6%, then bank A will save money. And when the bank saves money, it will be able to pass on the benefit to you by lowering interest rates on things like home loans, car loans, and personal loans.
How Could the April 2025 Repo Rate Cut Affect You?
When the RBI cuts the repo rate to 6%, it affects both borrowers and investors in different ways. Here’s how:
For Borrowers: Loans Could Get Cheaper
A repo rate cut often means your bank will also reduce your loan interest rate. Even a 0.25% drop could save you thousands of rupees every year in EMIs.
So when the RBI cuts the repo rate (like it did from 6.25% to 6% in April 2025), your loan’s interest rate may also go down — leading to lower EMIs.
| Scenario 1 | Scenario 2 | |
| Int rate 10% | Int rate 9% | |
| Home Loan Amount | ₹ 40,00,000 | ₹ 40,00,000 |
| Tenure (in Years) | 10 | 10 |
| EMI | ₹ 52,860 | ₹ 50,670 |
| Total interest to be paid | ₹ 23,43,200 | ₹ 20,80,400 |
| Savings (in Amount) | ₹ 2,62,800 | |
Fact - A 1% reduction in interest rate can save you ₹ 2.6 lacs.
How can the April 2025 Repo Rate Cut impact your Home loans?
For Investors: Market Moves & Lower FD Returns
A lower repo rate usually gives a boost to the stock market. Why? Because cheaper loans help businesses invest and grow, which can improve profits and share prices.
But there’s a trade-off — FD (Fixed Deposit) interest rates may also fall, meaning lower returns for savers. This could mean:
- Stocks may perform better — especially in sectors like real estate, auto, and infrastructure
- Fixed deposits and savings rates may decline, which would signal retail investors to consider diversifying their investments
Also explore - How does a Repo Rate Cut Impact Mutual Fund Investors?
Other Key Rates Tweaked by RBI
Alongside the repo rate, the RBI also adjusted the following benchmark rates:
- Standing Deposit Facility (SDF) hike to 5.75%: This is the rate at which banks park excess funds with the RBI. The revised rate here could encourage banks to lend more instead of parking funds with RBI
- Marginal Standing Facility to 6.25% - This is the Emergency overnight borrowing rate for banks
- Bank Rate revised to 6.25% - This is the long-term rate used mainly for penalties and regulatory actions.
Final Thoughts: What Should You Do Now?
The RBI’s decision to cut the repo rate to 6% in April 2025 — following a similar move in February — reflects its continued focus on supporting growth amid global uncertainties. For borrowers, this could mean lower EMIs and easier access to credit, especially if their loans are linked to the repo rate.
Savers, however, may see further drops in fixed deposit returns and might want to explore alternative fixed-income options. For investors investing in the Indian stock market, sectors like banking, real estate, and auto could benefit, but it’s important to stay aligned with long-term financial goals rather than short-term market trends.
Disclaimer: This blog is for general/educational information purposes and is no way to be considered as advice, or recommendation for investment or otherwise. Investment in securities market are subject to market risk, read all the documents carefully before investing. The securities quoted are exemplary and not to be considered as any kind of advice or recommendation. The past performance of the stocks are not necessarily indicative of future performance. INDmoney Private Limited 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500.
Sources: RBI Press Release – April 2025 Monetary Policy, India Interest Rate – Trading Economics