Daijiworld Media Network – Mumbai

Mumbai, Jun 9: Following the Reserve Bank of India's (RBI) 50 basis point repo rate cut, several public sector banks have slashed their lending rates, offering much-needed relief especially for existing borrowers.

Bank of Baroda led the move, cutting its Repo-Linked Lending Rate (RLLR) by 50 basis points to 8.15%, effective June 7. Punjab National Bank and Bank of India followed suit, reducing their RLLRs to 8.35%, while UCO Bank trimmed its RLLR to 8.30% and marginally lowered its MCLR across tenures. HDFC Bank too reduced its MCLR by 10 basis points, bringing its overnight and one-month rates to 8.9%.

As per RBI norms, floating-rate loans automatically adjust with repo rate changes, ensuring older borrowers see immediate rate cuts. New borrowers, however, may not enjoy the full benefit, as banks may widen the spread to protect their margins. For instance, Bank of Baroda’s revised home loan rates for new borrowers now start at 8%.

Old borrowers are expected to gain more because many banks were already offering highly competitive rates to attract customers before the rate cut. Lenders like Bank of India, Bank of Maharashtra, and Union Bank were offering loans as low as 7.85% for amounts up to ?30 lakh. Canara Bank, Indian Overseas Bank, and UCO Bank had home loans starting at 7.90%.

Among private players, South Indian Bank offered the lowest rate at 8.30% for loans up to ?30 lakh, followed by Karur Vysya Bank (8.45%) and PNB Housing Finance (8.50%). Axis Bank, Bandhan Bank, and Karnataka Bank had slightly higher rates ranging between 8.66% and 8.78%.

Meanwhile, depositors may face disappointment as banks look to reduce fixed deposit rates in line with the rate cut and increased liquidity, potentially making FDs less attractive for savers.