The State-owned Bank of Baroda (BoB) has announced that it will immediately transmit the Reserve Bank of India’s (RBI) latest policy rate cut of 25 basis points to its customers. This means that the bank’s external benchmark-linked lending rates for retail and MSME (Micro, Small and Medium Enterprises) loans will be reduced by 25 basis points. This decision aims to ensure that customers benefit quickly from the RBI’s monetary policy move.
The RBI had slashed key interest rates by 25 basis points for the second time in a row to support economic growth, which is facing threats from reciprocal tariffs imposed by the US. However, the Bank of Baroda has left the marginal cost of funds-based lending rate (MCLR) unchanged. The benchmark one-year tenor MCLR, which is used to price most consumer loans such as auto and personal loans, has been kept unchanged at 9%.
The reduction in lending rates is expected to benefit customers by making borrowing costs more affordable. This move is likely to have a positive impact on the economy, as it will increase consumer and business confidence, leading to increased spending and investment. The Bank of Baroda’s decision to immediately transmit the RBI’s policy rate cut shows its commitment to passing on the benefits of monetary policy to its customers.
Overall, the Bank of Baroda’s announcement is a positive development for borrowers, particularly in the retail and MSME segments, who are likely to benefit from the reduced interest rates. The move is also expected to support economic growth by increasing the availability of credit and making borrowing more affordable.