New Delhi, Feb. 7 -- With the Reserve Bank of India (RBI) slashing the repo rate by 25 basis points to 6.25 per cent, interest rates on fresh loans are likely to decline. Notably, today's repo rate cut was the first in nearly five years.

With short-term funding available cheaply to banks, personal loans to retail borrowers could also see a fall in interest rates in the coming weeks.

The 25 basis point cut in the repo rate is seen as the start of a rate cut cycle. Typically, banks cut interest rates on floating loans, such as home loans, that are linked to the repo rates.

The loans are governed by the marginal cost of funding-based lending rates, or MCLR, which consists of deposit rates, repo rates, operating costs, and the cost of main...