EMI Alert: Six Banks Raise Lending Rates After RBI Hike

If you have a home loan, this week brought news that will show up in your pocket soon. Six of India’s biggest banks have raised their lending rates, passing on the Reserve Bank of India’s repo rate hike to borrowers. For lakhs of home loan customers, that means a higher EMI at the next reset, or a longer repayment tenure.

The domino effect began on 7 October 2026, when the RBI’s Monetary Policy Committee raised the benchmark repo rate by 25 basis points to 5.50 percent. It was the first rate hike since February 2023, and the central bank changed its policy stance from neutral to what it calls “calibrated tightening”. Since most home loans taken after October 2019 are linked directly to the repo rate, banks wasted no time in following.

Which banks have raised their lending rates

All six public sector lenders raised their repo-linked benchmarks by exactly 25 basis points, mirroring the RBI move. Here is what each bank announced:

• State Bank of India: raised its External Benchmark Linked Lending Rate (EBLR) from 7.90 percent to 8.15 percent, plus credit risk premium and spread, and its Repo Linked Lending Rate (RLLR) from 7.50 percent to 7.75 percent, effective 15 October.
• Punjab National Bank: RLLR up from 8.10 percent to 8.35 percent, effective 8 October. Its MCLR and base rate remain unchanged.
• Bank of India: RLLR up from 8.10 percent to 8.35 percent, effective 7 October.
• Indian Bank: Repo Linked Benchmark Lending Rate up from 7.95 percent to 8.20 percent, effective October 2026.
• Bank of Baroda: benchmark retail lending rate up from 7.90 percent to 8.15 percent, effective 8 October, keeping its spread of 2.65 percent over the repo rate.
• Canara Bank: revised its repo-linked lending benchmarks in October 2026 as well.

Why the RBI raised rates in the first place

The central bank is fighting inflation, which has been climbing for months. Consumer price inflation touched 4.82 percent in August, and the September reading is projected at around 5.6 percent, a 21-month high driven mainly by food prices. The RBI has lifted its full-year inflation forecast for FY27 to 5.2 percent.

Global forces are adding fuel. Elevated crude oil prices, renewed geopolitical tensions and a weak monsoon with El Nino conditions are pushing up costs across the economy. RBI Governor Sanjay Malhotra said on 7 October that rate cuts are off the table for now.

What this means for your EMI

If your home loan is linked to the repo rate, your interest rate will rise by a quarter percentage point at your next reset date, which under RBI rules must come at least once every three months. Your bank will either raise your EMI or extend your loan tenure.

To put it in perspective: on a Rs 50 lakh, 30-year home loan, a 0.25 percent rise adds roughly Rs 700 to Rs 900 to the monthly EMI. If the bank instead extends the tenure, the same quarter-point rise quietly adds lakhs to your total interest. The longer your remaining tenure, the more the extra interest compounds.

What borrowers can do now

• Ask your bank how it applies the change. Many lenders extend the tenure instead of raising the EMI, which costs more over time. Request the EMI increase if you can afford it.
• Make small annual prepayments. Even a modest yearly lump sum can shave years off your loan and offset the extra interest.
• Compare before switching. Fresh borrowers should check the effective rate, processing fees and reset clauses across banks, not just the benchmark.
• Watch deposit rates too. Reports quoted SBI’s chairman as saying there may not be any rate action on deposits yet, so savers may not gain as quickly as borrowers pay more.

Is another hike coming?

Possibly. Economists at HSBC and Goldman Sachs expect another hike in December if inflation stays elevated. Growth remains strong, with the RBI expecting 7.1 percent GDP growth for FY27, giving it room to keep policy tight. For borrowers, the safer bet is to plan for a possible further hike this winter.

Check your loan statement this month, and do the math before your bank does it for you.

FAQs

Why did six banks raise their lending rates?

They are passing on the RBI’s 25 basis point repo rate hike of 7 October 2026. Banks fund themselves against the repo rate, so higher policy rates directly raise their lending costs.

Will my home loan EMI increase?

If your loan is linked to the repo rate, most likely at your next reset date. Your bank may raise the EMI or extend the tenure; check which one applies to you.

Which bank raised rates the most?

All six raised benchmarks by exactly 25 basis points, so the hike size is identical. What differs is each bank’s starting rate and its spread, which decide your final effective rate.

Will fixed deposit rates also rise?

Not yet at most big banks. Lenders raised loan rates while leaving deposit rates largely untouched, with about 6.25 percent on one-year fixed deposits at major banks.

Could rates go up again?

HSBC and Goldman Sachs expect another 25 basis point hike in December 2026 if inflation stays high. The RBI has said rate cuts are off the table and the next move can only be a hike or a pause.