HDFC Bank and BoB cut lending rates after RBI repo rate slash
Following the Reserve Bank of India's (RBI) recent decision to reduce the policy repo rate by 50 basis points, key changes in lending rates have been announced by key financial institutions.The Bank of Baroda (BoB), has responded by slashing its benchmark lending rate linked to the repo rate by the full 50 basis points. This adjustment aligns with the RBI's new repo rate of 5.5%, bringing BoB's Repo Linked Lending Rate (RLLR) down to 8.15%. This change, effective from June 7, marks a key step in transmitting the central bank's policy decisions to the banking sector, as confirmed by a statement from BoB.advertisementADJUSTMENTS AT HDFC BANKIn a parallel move, HDFC Bank has announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR) by 10 basis points across various tenures. These changes, effective from June 7, lower the overnight and one-month MCLR to 8.90%, the three-month rate to 8.95%, and the six-month and one-year MCLRs to 9.05%.
This adjustment aims to benefit borrowers with loans linked to these benchmarks, offering more affordable borrowing options in line with the RBI's monetary easing strategy.BROADER ECONOMIC CONTEXTThe RBI's decision to cut the repo rate by a larger-than-expected margin comes as part of a broader strategy to stimulate the economy. The central bank also reduced the cash reserve ratio by 100 basis points, enhancing liquidity by adding Rs 2.5 lakh crore to the banking system.This move is intended to encourage lending and bolster economic activity, particularly in the wake of past rate cuts in February and April.Borrowers can expect EMIs on home loans, personal loans, and other credit products to come down slightly, offering a bit of breathing space amid rising living costs. However, depositors may need to watch for possible cuts in fixed deposit interest rates in the coming weeks.Tune InMust Watch
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