Repo Rate
The rate at which the Reserve Bank lends short-term funds to commercial banks against government securities.
Formula
Test: it is the policy rate at which banks borrow overnight from the central bank under the liquidity adjustment facility
Unit
%
In depth
The repo rate is India's benchmark policy rate and the anchor for the entire rate structure — bank lending rates, deposit rates, bond yields and, through discount rates, equity valuations all key off it. Since 2019 most floating-rate retail loans in India must be linked to an external benchmark, usually the repo, which made transmission to borrowers far faster than under the older internal benchmarks. A change of 25 basis points on a large home loan is a meaningful monthly amount over a twenty-year tenor. The rate is set by the Monetary Policy Committee, which meets six times a year.
Worked example
A 50 basis point rise on a ₹50,00,000 home loan at 8.5% over 20 years raises the monthly instalment from about ₹43,391 to ₹45,072 — roughly ₹1,681 a month, or ₹4.03 lakh over the full tenor.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Repo Rate” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.