Home Loan EMI Not Reduced Despite Repo Rate Cut? Here’s How to File a Complaint
Many home loan borrowers expect their EMI to decrease immediately after a repo rate cut by the Reserve Bank of India (RBI). However, this is not always the case, and sometimes the reduction is delayed—or doesn’t happen at all. Understanding the reason behind this can save borrowers from unnecessary confusion and help them take timely action.
Why Your EMI May Not Reduce After a Repo Rate Cut
The primary reason your EMI may remain unchanged is the type of interest rate on your loan. There are three main types:
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Fixed-Rate Loans – If your loan is on a fixed interest rate, your EMI will not change regardless of repo rate adjustments. The rate agreed upon at the time of loan disbursal remains valid throughout the tenure.
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Floating-Rate Loans Linked to MCLR or Base Rate – Even for floating-rate loans, a reduction depends on the benchmark used. Many older loans are linked to MCLR (Marginal Cost of Funds based Lending Rate) or the base rate system. While banks sometimes adjust EMIs when these rates change, there is no mandatory requirement.
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Repo-Linked Floating Loans – For loans linked to the repo rate, EMI adjustments happen whenever the RBI changes the rate. However, factors like bank operational costs, credit risk premiums, and fund costs can delay or reduce the benefit passed to customers.
Tip: Always verify which type of loan you have before expecting any immediate relief.
What to Do If Repo-Linked Loan EMI Doesn’t Reduce
If your repo-linked home loan EMI hasn’t been adjusted after a rate cut:
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Write to your bank – Send a formal letter or email with your loan account details.
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Meet the branch manager – Sometimes, a personal discussion can expedite the process.
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Follow up within 30 days – If the bank does not respond, escalate the issue to the Grievance Redressal Officer or Banking Ombudsman.
Filing Complaints With RBI CMS
The Reserve Bank of India has made it easier for borrowers to lodge complaints against banks and NBFCs through its Complaint Management System (CMS):
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Accessible on both desktop and mobile, CMS allows complaints against commercial banks, urban cooperative banks, and NBFCs.
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Once submitted, the complaint is forwarded to the relevant regional RBI office or banking ombudsman for resolution.
Other Options for Borrowers
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Loan Conversion: Customers can request their bank to convert old loans linked to MCLR/base rate to repo-linked loans—usually for a nominal fee.
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Refinancing: Borrowers can also refinance their home loan with another bank offering a lower interest rate, especially if their credit score has improved since taking the loan.
These options can help borrowers reduce EMI burden and benefit fully from RBI rate cuts.
Summary: Even after repo rate cuts, EMIs may not reduce due to the type of interest rate, bank operational considerations, or loan benchmarks. Borrowers should confirm their loan type, follow up with the bank, and if needed, escalate via RBI CMS or the Banking Ombudsman. Refinancing or loan conversion can further maximize benefits.
