We covered the RBI's decision to raise the repo rate by 25 basis points to 5.50% on October 7, 2026 in our earlier piece on that hike. The follow-through has now started: several public-sector banks have raised their repo-linked lending rates (RLLR), the benchmark that most floating-rate home loans sanctioned after October 2019 are pegged to, according to reporting from Businessworld, ETV Bharat and India TV News.
1. Which Banks Moved, and By How Much
Punjab National Bank raised its RLLR from 8.10% to 8.35%, while keeping its MCLR and base rate unchanged, with the change reported effective October 8. Indian Bank's RLLR moved from 7.95% to 8.20%, and Bank of Baroda's from 7.90% to 8.15%. Bank of India and Indian Overseas Bank were both reported to have raised their rates to 8.35%, and Tamilnad Mercantile Bank, which also lends in Chennai and across Tamil Nadu, moved from 8.25% to 8.50%. One report also notes HDFC Bank cut its one-month MCLR by 15 basis points even as its one-year MCLR stood at 8.30%, a reminder that RLLR and MCLR can move in different directions at the same bank, so this single data point shouldn't be read as a broader trend without checking directly with the lender.
| Bank | Rate Benchmark | Before | After |
|---|---|---|---|
| Punjab National Bank | RLLR | 8.10% | 8.35% |
| Indian Bank | RLLR | 7.95% | 8.20% |
| Bank of Baroda | RLLR | 7.90% | 8.15% |
| Tamilnad Mercantile Bank | RLLR | 8.25% | 8.50% |
Figures as reported by Businessworld, ETV Bharat and India TV News following the RBI's October 7, 2026 repo rate decision. Bank of India and Indian Overseas Bank were also reported to have moved to 8.35%. Verify current rates directly with each lender before applying.
2. Why This Matters More Than the RBI Decision Itself
The RBI's repo rate is a policy signal; what actually changes your EMI is what your specific lender does with its own benchmark. This round of bank moves is the concrete, bank-by-bank evidence that the October 7 hike is now working its way into actual loan pricing. If your loan is RLLR-linked at one of these banks, the change should apply at your next contractual reset date, not necessarily immediately. If you're on an older MCLR-linked loan, the adjustment typically only shows up at your annual reset, so the practical impact could take months to arrive.
3. What Bangalore and Chennai Buyers Should Do Right Now
If you're actively shopping for a home loan, this is the moment to get fresh quotes from at least two or three lenders rather than relying on a rate card from a few weeks ago, since the increases above aren't uniform across banks. Our September bank rate comparison is a useful starting point for understanding how lenders typically differ, though you should treat it as a baseline to re-verify now rather than a current snapshot. If you already have a loan with one of the banks named above, it's worth checking your loan's benchmark and next reset date directly with your lender or on your most recent statement, so you know when, not if, this reaches your EMI.
The Bottom Line
The RBI's October 7 hike wasn't just a headline number, it's now visibly reflected in rate cards at several major public-sector banks, with moves ranging from 15 to 25 basis points depending on the lender. Existing floating-rate borrowers at these banks should expect the change to reach their EMI at their next reset, while new borrowers should shop current rates rather than planning around outdated quotes. Talk to our team if you'd like help thinking through loan eligibility on a specific project in Bangalore or Chennai.
