The Reserve Bank of India (RBI) has opted for stability in its first monetary policy meeting of the year. In February 2026, the Monetary Policy Committee (MPC) unanimously decided to keep the RBI repo rate unchanged at 5.25%, maintaining a neutral stance despite a record government borrowing plan of ?17.2 lakh crore. For the millions of Indians currently managing debt, any change in repo rate by RBI acts as a primary trigger for interest rate adjustments. In this blog, we discuss how this latest pause affects your borrowing costs and financial planning for the rest of 2026.
The RBI repo rate is the interest rate at which the central bank lends money to commercial banks. In the context of a personal loan, it serves as the foundational benchmark for pricing. When the RBI decides on a change in repo rate, banks adjust their lending rates accordingly to maintain their profit margins. Essentially, the repo rate acts as the cost of raw material for banks; if this cost stays steady, the interest on your personal loan remains predictable.
Since personal loans are often linked to external benchmarks, the RBI's policy directly dictates your monthly outflow.
Existing Floating-Rate Loans: If your personal loan is linked to an External Benchmark Lending Rate (EBLR), your interest rate is directly tied to the RBI repo rate. Because the rate remained steady at 5.25%, you should not see any increase in your EMIs this month.
Existing Fixed-Rate Loans: For those on a fixed-rate regime, this policy announcement has zero impact. Your interest rate remains locked as per your original agreement.
New Borrowers: While the benchmark is steady, banks are competing for deposits. Even without a change in repo rate by RBI, some lenders might offer special festival rates or lower spreads to attract high-quality borrowers with scores above 750.
Despite inflation being under control, two major factors prevented a further change in repo rate:
Currency Stability: The Indian Rupee has recently faced pressure, crossing the ?90 mark against the US Dollar. A rate cut now could have further weakened the currency.
Fiscal Watch: With the government planning massive market borrowing, the RBI is monitoring bond yields to ensure systemic liquidity remains balanced without stoking future inflation.
The RBI's decision to maintain the status quo at 5.25% provides a much-needed breathing room for the retail credit market. While the era of aggressive rate cuts might be on a temporary hiatus, the current environment is conducive to healthy borrowing. Banks and NBFCs are now focusing on risk-based pricing, where your CIBIL score matters more than the RBI repo rate.
If you have a credit score of 750 or higher, you can currently secure personal loans at a historically low rate for unsecured credit. For those with slightly lower scores, the focus should be on credit repair to take advantage of the steady rate environment before any eventual change in repo rate by RBI happens later in the year.
With rates on hold, your strategy should focus on optimisation rather than waiting for a market crash in interest rates.
High-Interest Loan (>15%): Consider a Balance Transfer. Many banks are offering competitive terms to attract high-score borrowers during this stable period.
Urgent Cash Need: Don't wait. Since a significant rate cut isn't expected until at least Q3 2026, waiting won't save you much in interest costs now.
Digital Borrowing: Make the most of the pause. With the collateral-free loan limit for MSMEs doubled to ?20 lakh in the 2026 budget, the credit landscape is becoming more accessible for all.
Small-Ticket Bridge: For smaller amounts, instant personal app like Loan112 are an excellent resource. They provide personal loans up to ?1.5 lakh with disbursals in just 10 minutes, allowing you to handle emergencies immediately without worrying about long-term macro-economic shifts.
The RBI repo rate remaining unchanged is good news for those seeking predictability. It ensures that the cost of borrowing does not go up, providing a stable environment of steady growth and consistent EMIs. While we may not see a downward change in repo rate by RBI until at least the second half of the fiscal year, the current landscape is ideal for borrowers to lock in solid deals or consolidate existing debt. The stability of early 2026 makes it a safe time to borrow responsibly.
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