New Delhi: Three leading public sector banks reduced their lending rates, bringing relief to both existing and new borrowers. Bank of India, Bank of Baroda and UCO Bank have announced the rate cut. This move is expected to make loans cheaper, encouraging more borrowing by individuals and businesses.
Earlier the Reserve Bank of India (RBI) announced a 25 basis points cut in the repo rate. The RBI’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, reduced the key policy rate to 6 per cent from 6.25 per cent. This marks the second consecutive cut under Malhotra’s leadership
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Bank of India lowered its Repo Based Lending Rate (RBLR) to 8.85 per cent, down from 9.10 per cent.Similarly, UCO Bank also reduced its repo-linked lending rate to 8.8 per cent, with the revised rate effective from Thursday. Bank of Baroda has reduced its external benchmark-linked lending rates for loans catering to Retail and MSME segments. Additionally, the Bank’s Overnight Marginal Cost of Funds-Based Lending Rate (MCLR) stands at 8.15%, and its One-Year MCLR is 9%.
MCLR is the minimum rate of interest banks are allowed to give out loans to its customers. It is a benchmark interest rate and it dictates the lower limit of the interest rate for a loan. In 2019, the RBI introduced the external benchmark linked rate (EBLR) – which is linked to the repo rate – to further increase the pace of monetary policy transmission. Currently, all the retail loans are linked to EBLR. While any hike or cut in the repo rate gets immediately reflected in loans linked to EBLR, banks review interest rates under MCLR regime every month at a pre-announced date.
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