Several leading banks, including Punjab National Bank, Bank of India, and UCO Bank, have lowered their lending rates following the Reserve Bank of India’s decision to cut the repo rate by 50 basis points. The move, aimed at boosting economic activity, is expected to make borrowing more affordable for consumers and businesses while supporting overall credit growth.
Punjab National Bank was among the first to implement the rate cut, reducing its repo-linked lending rate from 8.85 percent to 8.35 percent. The bank, however, retained its base rate and marginal cost of lending rate (MCLR) at previous levels. Bank of India followed suit, announcing a similar 50 basis point reduction in its repo-based lending rate, as disclosed in its stock exchange filing.
UCO Bank took a different approach, adjusting its MCLR by 10 basis points across all loan tenures. The revisions, which take effect on June 10, will lower the cost of various loans, including home and personal loans. The bank reduced its overnight MCLR to 8.15 percent, the one-month MCLR to 8.35 percent, and the three-month MCLR to 8.5 percent. The six-month and one-year MCLRs now stand at 8.8 percent and 9 percent, respectively.
Bank of Baroda also announced a 50 basis point reduction in its repo-linked lending rates for select loan categories, adding momentum to the trend of easing credit costs for borrowers.
These rate cuts follow the RBI’s policy adjustment, announced by the Monetary Policy Committee under the leadership of Governor Sanjay Malhotra, lowering the repo rate—a key benchmark at which the central bank lends to commercial banks. The move is designed to encourage spending and investment by providing access to cheaper credit.
In addition to the repo rate reduction, the RBI also slashed the Cash Reserve Ratio by 100 basis points, bringing it down from 4 percent to 3 percent. The rollout of this cut will be phased in four stages and is expected to inject Rs 2.5 lakh crore into the banking system. The CRR, which represents the proportion of deposits banks must hold with the RBI, influences liquidity availability and loan disbursement. By reducing this requirement, banks will have greater flexibility to lend, further supporting economic activity.
With several institutions already implementing revised lending rates, analysts anticipate a broader shift in borrowing trends that could stimulate demand across sectors. As consumers and businesses take advantage of lower financing costs, the RBI’s strategic policy adjustments may provide the necessary boost to economic recovery.
