Will Personal Loans Get Cheaper After RBI Repo Rate Cut? Experts Explain Impact on Borrowers

The Reserve Bank of India’s (RBI) latest 25-basis-point cut in the repo rate—to 5.25%—has revived hopes of cheaper personal loans for millions of borrowers. While lenders may not revise their rates immediately, industry experts say the lower cost of funds will soon translate into reduced interest rates and easier access to credit.

Will Personal Loans Get Cheaper?

With borrowing costs dropping for banks and NBFCs, personal loan rates are expected to soften in the coming weeks. Digital lenders and non-banking financial companies, which rely heavily on capital-market borrowings, tend to adjust quickly to rate cuts.

Rohit Garg, CEO of Olyv, called the policy "a growth-oriented shift," noting that lower repo rates will enhance liquidity and reduce funding costs. “This strengthens our ability to offer faster, more affordable and customer-focused credit solutions across India,” he said.

Financial expert Hemen Asher of Bhuta Shah and Co echoed the sentiment, saying that the cut “should help banks and NBFCs reduce the overall credit cost prevalent in India.”

Improved Access to Credit

With cheaper funds available, digital lenders are expected to widen credit access—particularly for small-ticket personal loans. Garg said the softer rate cycle will allow lenders to design more flexible repayment structures and encourage responsible borrowing.

Support for Low-Income Borrowers

The RBI’s decision may offer much-needed relief to microfinance borrowers, many of whom have been dealing with repayment stress. Lower interest rates could ease financial pressure, especially in rural and semi-urban regions.

“For the microfinance segment, this reduction provides timely relief for low-income households navigating repayment challenges,” Garg added, expecting a positive impact through 2025.

Personal Loan Demand Likely to Rise

As personal loans become more affordable, experts predict a surge in demand—particularly among salaried and self-employed individuals seeking quick, unsecured credit. With EMIs set to decline, borrowers may feel more confident about taking short-term loans to manage expenses or consolidate debt.

A Boost for Both Borrowers and Lenders

The MPC’s decision signals a supportive stance towards growth, financial stability, and consumer confidence. Borrowers could benefit from lower EMIs and greater access, while lenders gain a more favourable operating environment.

Overall, the direction is clear: personal loans are likely to get cheaper, and borrowers may start seeing revised rates and improved loan offers in the coming weeks.