Public sector banks raised repo-linked loan rates by a quarter point

What's going on here?

In the days after the Reserve Bank of India lifted the policy repo rate to 5.5% on 7 October 2026, several public sector and mid-sized lenders published matching increases on repo-linked lending rates. Bank of Baroda raised its Baroda Repo Based Lending Rate by 25 basis points to 8.15% from 7.90%. Punjab National Bank, Indian Overseas Bank, and Bank of India moved their repo-linked rates to 8.35% from 8.10%. Indian Bank’s repo-linked benchmark reached 8.20% from 7.95%, effective 8 October. UCO Bank adjusted a suite of treasury-linked benchmarks and its UCO Float repo-linked rate to 8.30% from 8.05%.

What does this mean?

Home loans, personal loans, and many business credits priced off the repo or treasury benchmarks do not wait for a separate board meeting. When the RBI moves, the external benchmark moves, and the bank’s published lending rate follows. A 25 basis point step on an ₹50 lakh floating home loan can add a few hundred rupees to a monthly EMI once the reset date hits. Existing borrowers typically see the change within one reset cycle, often within 90 days. Deposit rates can lag because banks still hold surplus liquidity from recent foreign-currency deposit windows, so funding costs may not jump on every savings product at once.

Why should I care?

If you borrowed after the external benchmark regime became common, open your loan statement and check which rate your bank published on or after 8 October. If you are shopping for a festive-season home loan, compare the effective annual rate across two or three lenders; the spread over repo still differs by bank. Fixed-rate borrowers are insulated until renewal. Anyone building a household budget for the next year should model EMIs one notch higher, even if the RBI pauses at the next meeting, because this pass-through is already in the price list.