If you are waiting for your EMI to go down after the RBI cut the repo rate, this news is important. On Tuesday, Reserve Bank Governor Sanjay Malhotra instructed banks:
“Immediately pass on the full benefit of the repo rate reductions to customers!”
Many banks, however, have not passed these benefits to loan customers, which has displeased the RBI.
Since February 2025, the RBI has cut the repo rate by 1.25% (125 basis points), bringing it down to 5.25%. Despite this, most banks are still charging the old, higher interest rates.
The RBI Governor called the MDs and CEOs of public sector banks and large private banks and emphasized: “This money belongs to the public. Don’t delay, reduce EMIs!”
Banking Improvements and Technology Push
Governor Malhotra also highlighted that the health of banks has improved and NPAs have reduced in 2025. However, he warned banks not to become careless.
He stressed that banking should become cheaper through better use of technology, benefiting small businesses and ordinary customers.
He urged banks to:
Improve customer service and resolve complaints faster
Stay alert to rising digital fraud cases and strengthen security using intelligence-based measures
Speed up re-KYC processes and return unclaimed deposits
The RBI noted that these meetings are held regularly (the previous one was on January 27, 2025), indicating that banks will be under constant scrutiny. If banks don’t reduce interest rates soon, stricter measures may be taken.
Key takeaway: Significant reductions in home loan, car, and personal loan EMIs are expected by January 2026. The ball is now in the banks’ court.
