Daijiworld Media Network - Mumbai

Mumbai, Jun 8: A wave of interest rate cuts is sweeping through India’s banking sector as several leading banks — including Punjab National Bank (PNB), Bank of India, and UCO Bank — have lowered their lending rates following the Reserve Bank of India’s (RBI) recent 50-basis-point reduction in the repo rate.

The RBI’s rate cut aims to boost economic growth by making loans more accessible and affordable for individuals and businesses alike.

Punjab National Bank was quick to act, trimming its repo-linked lending rate from 8.85% to 8.35%, passing on the benefit to its borrowers.

However, the bank kept its base rate and marginal cost of lending rate (MCLR) unchanged.

Bank of India mirrored PNB’s move, announcing a similar repo-linked lending rate reduction to 8.35% via a stock exchange filing.

UCO Bank opted for a different approach, lowering its MCLR by 10 basis points across various loan tenures — a move that will reduce borrowing costs for home, auto, and personal loans starting June 10. Its overnight MCLR now stands at 8.15% (down from 8.25%), while the one-month and three-month MCLRs have been adjusted to 8.35% and 8.5%, respectively. For longer-term loans, the six-month MCLR is now 8.8%, and the one-year MCLR has been set at 9%.

Bank of Baroda also joined the trend, slashing its repo-linked lending rate by 50 basis points for select loan segments, making credit cheaper for borrowers.

These moves come in the wake of the RBI’s Monetary Policy Committee, led by Governor Sanjay Malhotra, deciding to lower the repo rate — the rate at which the RBI lends to commercial banks — in an effort to stimulate the economy through increased spending and investment.

In addition to the repo rate cut, the RBI also announced a 100-basis-point reduction in the Cash Reserve Ratio (CRR), lowering it from 4% to 3%. This change, to be implemented in four phases, is expected to infuse Rs 2.5 lakh crore of liquidity into the banking system, giving banks more funds to lend.

The CRR is the share of deposits that banks are required to keep with the RBI, and reducing it allows banks to expand their lending, further bolstering economic activity.

With these developments, consumers and businesses alike can look forward to more competitive interest rates and increased credit availability, paving the way for a potential economic revival.