Banking · Retail Loans
A borrower of a Personal Loan has a variable interest rate linked to the bank's Repo Rate Linked Lending Rate (RLLR). If the Reserve Bank of India (RBI) increases the Repo Rate, what is the most likely immediate impact on the loan?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The interest rate will only increase if the loan is secured by land or property.
- 2The borrower's interest rate will increase, leading to either an increase in EMI or an extension of the loan tenure.✓
- 3The borrower's EMI amount will remain constant, but the principal component of each EMI will increase.
- 4The borrower's EMI amount will decrease, extending the loan tenure.
Correct answer
The borrower's interest rate will increase, leading to either an increase in EMI or an extension of the loan tenure.
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