Indian Overseas Bank (IOB) has announced a 25 basis points reduction in its Repo Linked Lending Rate (RLLR), effective immediately. The new rate stands at 8.85%, down from 9.10%. This move comes after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decision to reduce the Policy Repo Rate from 6.25% to 6%. The rate cut is a response to rising global economic uncertainties, particularly the United States’ announcement of 27% tariffs on Indian imports. The bank’s Asset Liability Management Committee (ALCO) convened on April 11 and decided to pass on the benefit of the reduced policy rate to customers. The revised rate structure aims to enhance credit affordability and encourage economic activity during a time of global economic flux.
IOB’s decision aligns with its policy of promptly responding to monetary policy changes and supporting borrowers with reduced interest burdens. The bank’s move is a step towards easing the financial burden on customers and encouraging them to borrow at a lower rate of interest. This development is significant, as it comes amidst global economic uncertainties and a potential slowdown in economic growth.
The reduction in RLLR will have a cascading effect on other lending rates, such as the Marginal Cost of Funds-Based Lending Rate (MCLR), which is used to determine the interest rates on home and other loans. This move is expected to benefit consumers and corporates alike, making borrowing more affordable and sustainable. IOB’s decision to pass on the benefit of the rate cut to customers is a positive step, as it demonstrates the bank’s commitment to supporting economic growth and promoting credit accessibility.
IOB’s announcement is the latest in a series of rate cuts by public sector lenders in India. The bank joins other state-owned banks such as Bank of Baroda (BoB), which recently cut its lending rates by 25 basis points. The move is seen as a response to the RBI’s rate cut and reflects the bank’s focus on supporting economic growth and promoting credit availability. The rate reduction will also help to increase loan disbursements and boost economic activity, thereby supporting India’s growth momentum. Overall, IOB’s decision to reduce its RLLR is a welcome move, which will benefit customers and contribute to the overall economic well-being of the country.