Existing borrowers can switch but they must be prepared for more volatility. Automobile loans If an individual is planning to buy a new home or automobile this festive season. one's EMIs could get cheaper due to external benchmark linked interest rates that banks have begun to roll out for retail borrowers and small and micro enterprises. The move that are followed by the Reserve Bank of India directive that all banks should introduce external benchmark linked loans for floating rate loans in order to retail. personal, small, medium and micro enterprises (MSME) borrowers from the 1st of October. The loans can further be linked to either the RBI policy repo rate, Government of India three months or six months Treasury Bill yield or any other benchmark market interest rate that are to be published by the Financial Benchmarks India Private Ltd. Most banks that have chosen to link their rates to the repo rate which is currently at 5.4 per cent. With the RBI expected to cut the rates by another 25 basis points, interest rates could further be reduced. State /bank of India was one of the first lenders who announced that it will adopt repo rate as the external benchmark for all floating rate loans for MSME, home and retail loans, from the 1st of October, 2019. The bank will be eligible to charge 265 basis points that are spread above the current repo rate of 5.4 per cent, which means an effective benchmark rate of 8.05 percent, According to its website home loans are up to INR 30 lakh that will have an effective rate of 8.20 per cent for salaried employees, while loans between INR 30 lakh to INR 75 lakh will be having an effective rate of 8.45 percent and loans above INR 75 lakh will have a rate of 8.55 per cent.