Bank of Baroda (BoB) and Indian Overseas Bank (IOB) have made significant adjustments to their Marginal Cost of Fund-based Lending Rate (MCLR), slashing it by up to 15 basis points (0.15%). This revision, which cuts interest rates, will make MCLR-based loans more affordable for borrowers at these banks. The timing of this move is notable, as it comes just before the start of the festive season, which begins next week.
The festive season, marked by the beginning of Navratri, a nine-day festival considered auspicious for new beginnings, is often a time when people make significant purchases or investments. The reduction in MCLR by BoB and IOB is likely to boost consumer sentiment and encourage borrowing, as lower interest rates make loans more attractive to potential borrowers.
Furthermore, the recent Goods and Services Tax (GST) rationalization, set to take effect from September 22, 2025, coincides with the start of Navratri. This rationalization aims to simplify and reduce GST rates, making various goods and services more affordable for consumers. The combination of lower MCLR rates and GST rationalization is expected to create a positive festive sentiment, driving economic growth and consumer spending.
The reduction in MCLR by BoB and IOB will apply to various types of loans, including personal loans, home loans, and car loans, among others. Borrowers with existing MCLR-based loans may also benefit from the reduced rates, depending on the terms of their loan agreements. As the festive season approaches, the move by BoB and IOB is likely to be followed by other banks, leading to a more competitive lending environment and increased access to credit for consumers.
Overall, the revision in MCLR by BoB and IOB, coupled with the GST rationalization, is expected to provide a stimulus to the economy during the festive season. With lower interest rates and reduced GST rates, consumers are likely to feel more confident about making purchases and investments, driving economic growth and development.