SBI Research Sees RBI Repo Rate Rising 50 bps, Loan EMIs Could Get Costlier

New Delhi | 14 Sep 2026

Home loan and other floating-rate borrowers could face higher borrowing costs if the Reserve Bank of India raises the repo rate in the coming months, as advocated by SBI Research. Its latest Ecowrap report has called for a 25-basis-point increase in October followed by another 25-bps rise in December, citing crude oil prices above $100 a barrel, external shocks and growing inflation risks.

SBI Research advocates RBI repo rate hike in October and December

SBI Research has recommended that the RBI raise the policy repo rate by 25 basis points at the next Monetary Policy Committee meeting and consider another 25-bps increase in December. If both increases are implemented, the cumulative rise would be 50 basis points, or 0.50 percentage point.

The recommendation is not an RBI decision. The central bank has kept the repo rate unchanged at 5.25% for four consecutive policy reviews, including its August 2026 meeting. The next MPC meeting is scheduled for 5-7 October.

“We strongly advocate a 25-bps rate hike in the upcoming October policy.”

— SBI Research, Ecowrap report

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SBI Research said the economic environment had changed significantly over the past month, with elevated energy prices and wider inflationary pressures increasing the case for monetary tightening.

What an RBI rate hike could mean for home loan EMIs

A higher repo rate can eventually make loans more expensive, particularly for borrowers whose floating-rate loans are linked to an external benchmark such as the RBI repo rate.

If banks transmit a higher policy rate to customers, borrowers could see their lending rates revised at the applicable reset date. Depending on the loan agreement and lender policy, this may result in a higher monthly EMI, a longer repayment tenure or a combination of the two.

The impact would not necessarily be immediate or identical for every borrower. Fixed-rate loans and loans linked to other benchmarks may respond differently.

Crude oil above $100 raises inflation concerns

The SBI Research assessment comes as international crude oil prices have moved above $100 a barrel amid heightened geopolitical uncertainty. India, which imports most of its crude oil requirements, is particularly sensitive to prolonged increases in global energy prices.

Higher crude prices can affect transportation, fuel, manufacturing and logistics costs, potentially feeding into consumer inflation. They can also put pressure on the rupee and India’s current account position.

SBI Research said one of its models indicated crude prices could reach $123 a barrel over a 15-day period under a higher-risk scenario, while another model projected an average closer to $105 a barrel. These are estimates rather than confirmed future prices.

Inflation outlook puts October RBI MPC meeting in focus

SBI Research said inflationary pressure was showing signs of becoming more broad-based, including in areas such as crude petroleum and natural gas, beverages, pharmaceuticals and electronics.

The report estimated that if crude oil prices remain elevated, inflation in October and November could move towards 6.5% or higher. The trajectory of food prices, energy costs, the rupee and global financial conditions will therefore remain important ahead of the October RBI policy decision.

RBI Governor Sanjay Malhotra has meanwhile maintained that the prevailing monetary policy remains appropriate, while the central bank continues to monitor inflation, liquidity and external risks.

RBI has not announced a 0.50% repo rate increase

Borrowers should note that the proposed increases are recommendations from SBI Research and not a confirmed RBI decision. The Monetary Policy Committee will independently decide the repo rate after evaluating inflation, economic growth and financial conditions.

If the RBI ultimately follows the two-step path suggested by SBI Research, the repo rate would rise from the current 5.25% to 5.50% after a 25-bps increase and to 5.75% after a further 25-bps rise. Such a move could raise borrowing costs for eligible floating-rate home, vehicle and personal loans, subject to individual banks’ transmission and reset mechanisms.

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