Big News from RBI – Loan EMI Will Be Cheaper Now

The Reserve Bank of India (RBI) has given a big relief to people who have taken loans like home loans, car loans, or personal loans. RBI has cut the repo rate by 50 basis points, which means your monthly EMI will become lower.

This announcement was made after the MPC (Monetary Policy Committee) meeting that started on 4 June and ended on 6 June 2025. The new repo rate is 5.50%, which was earlier 6%.

What Is Repo Rate?

Repo rate is the interest rate at which RBI gives money to banks. When RBI lowers this rate, banks also reduce the interest on loans given to people. This helps reduce the EMI (monthly payment) on home, car, or personal loans.

So, when repo rate is reduced, loan EMI also goes down. When repo rate increases, EMI becomes costlier.

RBI’s Third Repo Rate Cut in 2025

This is the third time in a row that RBI has cut the repo rate in 2025:

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In February, RBI reduced it by 25 basis points
In April, another 25 basis points were cut
Now in June, RBI has cut 50 basis points

This is called a hat-trick of rate cuts! This is a big gift for people who have loans or want to take loans in the future.

Real-Life Example: How Much Will You Save?

Let’s say you took a home loan of ₹50 lakh for 30 years, and the interest is 9%.

Before the rate cut:

Your EMI was about ₹40,231

After the rate cut of 0.50%:

Your new EMI will be about ₹38,446

So, you will save around ₹1,785 every month, which is more than ₹21,000 per year!

This saving can help you manage your budget better or invest somewhere else.

Why Did RBI Cut the Repo Rate?

The main reason for this move is to boost the Indian economy. When EMIs are low, people will take more loans to buy homes, cars, or start businesses. This will increase spending, create jobs, and help the country grow.

Also, it helps control inflation, which means keeping prices under control so that common people are not burdened.