NEW DELHI: On Sunday, state-owned Bank of Baroda (BoB) announced a reduction of its benchmark lending rate linked to the repo rate by 50 basis points, aligning with the Reserve Bank of India’s (RBI) recent rate cut.
Meanwhile, private sector lender HDFC Bank lowered its Marginal Cost of Funds-based Lending Rates (MCLR) by 10 basis points across various tenures, which will be advantageous for borrowers linked to this benchmark.
Following the RBI’s policy repo rate cut, BoB has reduced its Repo Linked Lending Rate (RLLR) by 50 basis points effective June 7, now standing at 8.15 percent.
This adjustment reflects BoB’s full implementation of the RBI’s rate cut in its RLLR.
According to HDFC Bank’s website, the new MCLR rates, effective June 7, include a 10 basis point reduction in the overnight and one-month rates to 8.90 percent.
The three-month MCLR has been lowered by 10 bps to 8.95 percent, while the six-month and one-year rates now stand at 9.05 percent after a similar reduction.
Additionally, lending rates for both the two-year and three-year tenures have been cut from 9.20 percent to 9.10 percent.
Earlier on Friday, the RBI unexpectedly reduced interest rates by 50 basis points and lowered the cash reserve ratio for banks to facilitate increased lending to stimulate the economy. The six-member monetary policy committee, chaired by Governor Sanjay Malhotra, voted with a majority of five to one to lower the benchmark repo rate to 5.5 percent and to cut the cash reserve ratio by 100 basis points to 3 percent, injecting ₹2.5 lakh crore into the already surplus banking liquidity.
With this latest reduction, the RBI has cut interest rates by a total of 100 basis points in 2025, starting with a 25 basis point reduction in February — the first cut since May 2020 — and followed by another similar-sized cut in April.
