In general, an increase in the repo rate makes borrowing of money from the central bank more expensive for commercial banks, which further leads to a rise in interest rates for their customers. This can reduce demand for loans and affect the profitability of banks. On the other hand, a higher repo rate can also encourage commercial banks to keep more money in reserve, which can improve their financial stability.

The overall impact of a change in the repo rate on the banking sector can be influenced by several factors, including the economy's overall health, the level of competition in the banking industry, and the stance of monetary policy. As such, the impact of a change in the repo rate on the banking sector can be challenging to predict and may vary over time.

Bond yields increase as the RBI raises rates at the 2023 RBI MPC Meeting. Indian government bond yields rose slightly on Wednesday due to the Reserve Bank of India (RBI) maintaining its monetary stance while raising the repo rate as anticipated. As of 11:30 IST, the benchmark 10-year yield was 7.3435 percent. Before the policy decision, it was trading at 7.3124% after Tuesday's closing price of 7.3102%.