12 hours ago
- Business
- New Indian Express
RBI's repo cut: Competition drives rapid loan rate reductions
CHENNAI: Unlike in the past, most leading commercial banks in India have promptly passed on the repo rate cut announced by the Reserve Bank of India (RBI) to their customers, resulting in a much quicker transition.
The RBI implemented a 50 basis point (bps) reduction in the repo rate on June 6, lowering it from 6.25% to 5.75%. This move aims to stimulate economic growth by making borrowing more affordable and encouraging investment, particularly in sectors such as housing and micro, small, and medium enterprises (MSMEs).
Following the RBI's policy rate cut, the State Bank of India (SBI), the country's largest lender, announced reductions in its lending rates—cutting the Repo Linked Lending Rate (RLLR) by 50 bps to 7.75% and the External Benchmark Based Lending Rate (EBLR) to 8.15%.
According to SBI, the revised rates are effective from June 15, 2025, and apply to both new and existing borrowers.
SBI's move has influenced other major banks to follow suit. Bank of Maharashtra reduced retail loan rates by up to 50 bps, effective June 10, 2025.
HDFC Bank, Canara Bank, and Bank of Baroda also implemented reductions in their Marginal Cost of Funds-Based Lending Rates (MCLR), making loans more affordable for consumers.
