RBI Repo Rate Today: Governor Sanjay Malhotra said on June 6, 2025, that the Reserve Bank of India (RBI) has dropped the repo rate by 50 basis points to 5.5%, bringing the total reduction since February 2025 to 100 basis points. Together with a 100 basis point decrease in the Cash Reserve Ratio (CRR) to 3%, this sizeable drop is intended to spur economic development in the face of international uncertainty, particularly U.S. tariffs. Given that India’s GDP is expected to increase by 6.5% in FY 2025–2026 and that inflation is expected to be 3.7%, this pro-growth strategy opens doors for both borrowers and investors. This article examines the effects of the RBI repo rate drop on loans, investments, and financial planning while providing practical tips for taking advantage of this shifting market conditions.
RBI Repo Rate Today: Important Updates
One of the most important tools for controlling inflation and liquidity is the repo rate, which is the interest rate at which the RBI loans to commercial banks. The RBI’s move to a “neutral” approach, which balances growth and inflation management, is reflected in the latest drop from 6% to 5.5%. The following are the main developments from the Monetary Policy Committee (MPC) meeting in June 2025:
- With effect from June 6, 2025, the repo rate was lowered by 50 basis points to 5.5%.
Reverse Repo Rate: 3.35 percent, unchanged. - Rate for Marginal Standing Facilities (MSF): Modified to 5.75%.
- Reduced by 100 basis points to 3%, the Cash Reserve Ratio (CRR) released ₹2.5 lakh crore in liquidity.
- Economic Outlook: Inflation is expected to be 3.7%, below the 4% objective, while GDP growth is predicted to be 6.5% for FY 2025–2026.
Why It Is Important: Bank borrowing costs are decreased by lower repo rates, which results in reduced EMIs for consumers and more affordable loans. Although it may lower fixed deposit (FD) yields, this boosts investment, expenditure, and industries like real estate and auto.
Effect on EMIs and Loans
Borrowers gain when bank lending rates are directly lowered by the repo rate drop. For instance:
Home loans: EMIs have decreased as a result of bank rates being lowered to 7.8–8.1% by SBI and Bank of Maharashtra. The monthly EMI for a ₹50 lakh house loan at 8% for 20 years is now ₹41,822, which is less than the ₹44,986 at 9%, saving ₹3,164.
Personal loans: Rates for personal loans might decrease from 12–14% to 11–13%, which would result in EMIs of ₹500–₹600 for every ₹10 lakh loan.
Auto Loans: Vehicle financing is now more reasonable thanks to auto loan rates of 8.45% offered by banks like Bank of Maharashtra.
Hack: To optimise savings from reduced EMIs, refinance high-interest loans or choose shorter tenures.
The Impact of the Repo Rate on Your Investments
Certain assets benefit from the repo rate drop, while others are impacted. Here’s how:
1. Opportunities in the Stock Market
Reductions in repo rates increase liquidity and propel stock market increases. Banking and real estate sectors led the gains as the Sensex surged 700 points to 81,753 and the Nifty surpassed 24,900 on June 6, 2025.
- Banking Stocks: Reduced financing costs and increased loan demand boost SBI and ICICI Bank.
- Real estate: As a result of lower financing, companies such as DLF and Jaypee Infratech benefit from the increasing demand for houses.
- Consumer goods: As rural spending increases due to improved monsoons, FMCG stocks, such as Hindustan Unilever, climb.
Hack: To take advantage of rate-cut-driven growth, invest in real estate mutual funds through platforms like Groww or sectoral ETFs like Nifty Bank.
2. Savings and Fixed Deposits (FDs)
As banks adapt to reduced repo rates, FD rates can drop. For instance, conservative investors, particularly elderly, were impacted when SBI and HDFC Bank recently reduced FD rates by 25 to 50 basis points.
Hack: Before further reductions, lock in long-term FDs at present rates (such as Ujjivan SFB’s 7.5%), or look at senior citizen savings plans for steady yields.
3. Mutual Funds for Debt
As bond prices climb in tandem with declining interest rates, long-duration debt funds profit, providing returns of 8–10% in 2025. The yields on short-term funds could be lower.
Hack: To balance interest rate risks and profits, invest in dynamic bond funds.
Tax Consequences of Post-Repo Rate Cut Investing
Understanding the financial ramifications of the previous tax system is necessary if you want to use investment profits to maximise your finances:
1. Tax on Capital Gains
Gains from the stock market are taxed according to the holding period:
- Short-Term Capital Gains (STCG): Section 111A taxes gains on equities sold within a year at a rate of 15%. For instance, a ₹1,500 tax is due on a ₹10,000 gain on SBI shares.
- Long-Term Capital Gains (LTCG): Section 112A levies a 12.5% tax on gains exceeding ₹1.25 lakh per year on equities held for more than a year.
Hack: Redirect gains to investments or debt repayments by holding equities for more than a year to take advantage of the ₹1.25 lakh LTCG exemption.
2. Taxation of Dividends
Stock or mutual fund dividends are taxed at your slab rate, with 10% TDS applied if the amount exceeds ₹5,000 per year.
Trick: To reduce taxes and increase savings, reinvest dividends into tax-saving plans like ELSS.
3. Transaction Tax on Securities (STT)
Stock transactions are subject to a 0.1% STT. For instance, there is a ₹12 STT when purchasing 100 ICICI Bank shares for ₹1,200.
Hack: To ensure proper ITR filing by July 31, 2025, track STT and profits using demat accounts on sites such as Zerodha.
4. Strategies for Saving Taxes
- Balance Losses: To lower tax obligations, use capital losses to balance profits.
- Section 80C: To reduce taxable income, invest up to ₹1.5 lakh in PPF or ELSS.
- Tax Harvesting: To take advantage of the LTCG exemption, sell equities with profits up to ₹1.25 lakh each year.
- Old Tax Regime: If your deductions total more than ₹2.5 lakh, use this option to free up money for investments or loan repayments.
Hack: Compare regimes using internet tax calculators, then use the savings to reduce debt or make high-yield investments.
Smart Investing Techniques Rate Cut After Repo
The 5.5% repo rate fosters an atmosphere that is conducive to wise investing. The following is how to capitalise:
- Invest in Growth Sectors: Use SIPs on sites like Upstox to allocate 10–15% of your portfolio to stocks in banking, real estate, and fast-moving consumer goods.
- Refinance Loans: Reduce EMIs or duration by refinancing personal or home loans at reduced rates.
- Diversify Investments: To balance risk and reward, diversify your investments by holding equities, debt mutual funds, and long-term foreign direct investments.
- Track Inflation: Keep an eye out for price rises that could lead to future rate hikes, since inflation is now at 3.7%.
- File ITR on Time: To avoid penalties under Section 234F, report dividends and profits by July 31, 2025.
Hack: To take advantage of market rallies while keeping loan EMI costs within reasonable limits, start a monthly SIP of ₹2,000 to ₹5,000 in sectoral ETFs or the Nifty 50.
Trends in RBI Repo Rates (2020–2025)
The Reserve Bank of India (RBI) changed the repo rate many times between March 2020 and June 2025 in response to changing economic circumstances.
- March 2020: The RBI lowered the repo rate by 75 basis points to 4.40% in an effort to alleviate the economic strain caused by the COVID-19 epidemic.
- February 2023: The RBI raised the repo rate by 25 basis points to 6.50% in order to counteract the growing pace of inflation.
- February 2025: The RBI started a 25 basis point decrease, bringing the repo rate down to 6.25%, as inflation moderated and GDP momentum slowed.
- April 2025: Citing global concerns and the need to spur economic development, the RBI again lowered the repo rate by 25 basis points to 6.00%, maintaining its accommodating stance.
- June 2025: In a more forceful action, the RBI decreased the repo rate for the third time in 2025, cutting it by 50 basis points to 5.50%. In the face of low inflation and uncertain global economic conditions, this decision sought to increase investment and consumption.
The RBI’s dynamic approach to striking a balance between the need to support economic development and inflation control is reflected in these measures.
Considerations for Risks
- Inflation Spike: Future rate rises might result from increased liquidity pushing inflation past 4%.
- Global Uncertainties: Markets may be impacted by U.S. tariffs and fluctuations in commodity prices.
- FD Rate Declines: Conservative investors may be impacted by lower FD returns.
- Market Volatility: Stock corrections may result from excessive exuberance.
Hack: To shield stock investments against abrupt market declines, use stop-loss orders on trading platforms.
Frequently Asked Questions (FAQ)
What is today’s RBI repo rate?
The repo rate was lowered by 50 basis points to encourage economic development, and as of June 6, 2025, it is at 5.5%.
What impact will the repo rate drop have on my loans?
Reduced repo rates save ₹500–₹3,000 per month for a ₹10–50 lakh loan by lowering EMIs for personal, housing, and vehicle loans.
Which investments gain from the reduction in the repo rate?
Stocks in banking, real estate, and fast-moving consumer goods (FMCG) as well as mutual funds with long-term debt are probably going to rise.
How are profits from the stock market taxed?
If kept for less than 12 months, STCG is taxed at 15%, while if held for more than 12 months and above ₹1.25 lakh, LTCG is taxed at 12.5%.
What is the FY 2024–2025 ITR filing deadline?
Individuals must do so by July 31, 2025, and those who need an audit must do so by October 31, 2025.
Conclusion
The RBI’s June 6, 2025, repo rate reduction to 5.5% makes it possible to invest wisely in India’s booming economy. This is the perfect time to act because of lower loan EMIs, surging stock markets (Sensex at 81,753), and chances in banking and real estate. You may optimise profits while controlling risks by utilising tax-saving techniques including Section 80C, tax harvesting, and long-term stock ownership. To remain in compliance, refinance loans to reduce interest, start investing through platforms like Dhan or Bajaj Finserv, and file your ITR before July 31, 2025. Take advantage of this opportunity to accumulate riches and safeguard your financial future!
Disclaimer: This material is not intended to be tax or investment advice; rather, it is only informational. Before making financial decisions, get advice from a qualified tax expert or financial planner.
Income Tax Due Date Alert: Must Know Investment Hacks for First-Timers
Prostarm Info Systems Limited: Your First Step to Smart Investing!