On 7 October 2026, the Reserve Bank of India’s Monetary Policy Committee raised the policy repo rate by 25 basis points to 5.50%, from 5.25%. The MPC resolution shows the vote for the hike was unanimous, and the stance moved from neutral to “calibrated tightening”. It is the RBI’s first rate increase since February 2023.
What changes
The Standing Deposit Facility rate is now 5.25%, and the Marginal Standing Facility rate and Bank Rate are 5.75%. Two members, Dr Nagesh Kumar and Prof Ram Singh, voted for the hike but preferred to keep the stance neutral.
The MPC cited renewed conflict in West Asia and swings in crude oil prices, a deficient southwest monsoon with strong El Niño conditions, and rising inflation expectations. CPI inflation rose to 4.8% in August from 4.5% in July. The RBI now projects CPI inflation of 5.2% for 2026-27, with 6.0% in the third quarter, and GDP growth of 7.1%. The resolution says rate cuts are off the table in the near term. The next meeting is on 2 to 4 December 2026.
The same day’s statement on developmental and regulatory policies made Account Aggregators interoperable, with implementation expected by 31 December 2026.
What it means for founders
Indian businesses with loans linked to the repo rate or an external benchmark should expect their rate to reset upwards at the next reset date. That includes many MSME term loans, working capital lines and loans against property. Fixed rate borrowing taken earlier this year now looks cheaper by comparison. With the RBI signalling that its next move could be another hike or a pause, cash planning should not assume relief in the December review.
What to do now
- List every loan and credit line, its benchmark and its next reset date, and model a further 25 basis point rise.
- Ask your bank whether moving to a fixed rate or extending tenure on existing loans is possible, and at what cost.
- Tighten receivables: collecting from customers sooner reduces how much working capital you have to borrow.
- If you are weighing debt for a new project, revisit the plan with your strategy numbers at today’s rates.
Sources: RBI, Resolution of the Monetary Policy Committee, October 5 to 7, 2026; RBI, Statement on Developmental and Regulatory Policies; SCC Online, RBI hikes repo rate to 5.50%