The State-owned Bank of Baroda (BoB) has announced a reduction in its benchmark lending rate, linked to the repo rate, by 50 basis points. This move is in line with the Reserve Bank of India’s (RBI) recent rate cut. The bank’s Repo Linked Lending Rate (RLLR) now stands at 8.15%, effective from June 7. This reduction will benefit borrowers whose loans are linked to this benchmark.
Additionally, private sector HDFC Bank has also reduced its Marginal Cost of Funds-based Lending Rates (MCLR) by 10 basis points across all tenures, effective from June 7. The new MCLR rates range from 8.90% for overnight and one-month rates to 9.10% for two-year and three-year tenure lending rates.
The RBI’s rate cut was announced on Friday, where the monetary policy committee voted to lower the benchmark repurchase or repo rate by 50 basis points to 5.5%. The cash reserve ratio for banks was also reduced by 100 basis points to 3%, making available an additional ₹2.5 lakh crore to the banking system.
This is the third interest rate cut by the RBI in 2025, with a total reduction of 100 basis points. The previous cuts were made in February and April, with each reduction being 25 basis points. The RBI’s move is aimed at boosting the economy by making more money available for lending.
The reduction in lending rates by BoB and HDFC Bank is expected to benefit borrowers, particularly those with loans linked to the repo rate or MCLR. With the decrease in lending rates, borrowers can expect to pay lower interest rates on their loans, which can help reduce their debt burden. The move is also expected to increase credit demand and boost economic growth. Overall, the reduction in lending rates by banks is a positive development for the economy and borrowers alike.