Interest Rate
A savings account paying 3% and a personal loan charging 14% are both, technically, interest rates. An interest rate is the cost of borrowing money, or the reward for lending it, expressed as a percentage per year. Banks pay you interest to keep your money with them and charge more interest to lend it out to someone else. The gap between the two is how banks make money.
Every EMI, every fixed deposit and every credit card bill in the country is just interest rates wearing a different name.
The RBI’s repo rate sets the floor, and banks build their own lending and savings rates on top of it. A home loan, a car loan and a fixed deposit all move in roughly the same direction when the repo rate changes, only at different speeds and by different amounts.
Through 2025, as the RBI cut rates, banks lowered both their loan rates and the rates they paid on new fixed deposits within weeks of each decision. After the October 2026 hike, the direction reversed: borrowers began paying more and savers started being offered higher deposit rates.