Advertisement
Public sector lenders Bank of Baroda and Bank of India reduced their lending rates shortly after the Reserve Bank of India lowered the repo rate by 25 basis points. Indian Bank also made a minor cut to its MCLR in the week. The RBI's decision marked its first rate reduction in about six months and came with an assurance of providing INR 1 lakh crore in liquidity to stabilise growth amid pressure from steep US tariffs. The latest rate actions are expected to ease borrowing costs for households and businesses and support economic activity.
Public sector lenders reacted promptly after the Reserve Bank of India reduced the key repo rate by 25 basis points. Bank of India confirmed in a regulatory filing that it brought down its Repo Based Lending Rate to 8.10 percent from the earlier 8.35 percent. Bank of Baroda stated in its separate filing that its Baroda Repo Based Lending Rate will decrease to 7.90 percent from 8.15 percent, with the revised rate becoming applicable from December 6. Advertisement
Indian Bank had already adjusted its lending rates earlier in the week, trimming its one-year Marginal Cost of Funds Based Lending Rate by 5 basis points to 8.80 percent, effective from December 3. These moves indicate a broader alignment among lenders following the central bank's monetary policy decision.
The rate cut by the RBI was its first in roughly half a year and came with an announcement of a planned liquidity infusion of INR 1 lakh crore into the banking system. The monetary policy committee, led by RBI Governor Sanjay Malhotra, unanimously supported the 25-basis-point reduction while maintaining a neutral stance, keeping room open for future adjustments.
Officials explained that the rate cut aims to support economic conditions that have been under pressure due to the significant 50 percent tariff imposed by the US on Indian goods. The central bank's step also complements ongoing government initiatives, including major GST-related reforms, relaxation of labour norms and adjustments in financial sector regulation.
Lower repo rates reduce the cost at which banks borrow from the RBI. With cheaper funds, lenders are able to lower MCLR and similar lending benchmarks, making home, auto and business loans more affordable. The reduction in EMIs is expected to encourage borrowing and support overall economic activity, especially at a time when demand conditions require steady reinforcement.
Source PTI
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
