The Reserve Bank of India (RBI) recently reduced its repo rate by 25 basis points to 6.25%, the first cut in five years. In response, State-owned Bank of Maharashtra (BoM) has reduced its interest rates on retail loans, including home and car loans, by 25 basis points. The bank’s benchmark home loan rate is now 8.10%, one of the lowest in the industry, and car loan rates have been reduced to 8.45% per annum. Additionally, BoM has waived processing fees for home and car loans. The bank has also received approval from the RBI to establish an International Financial Services Centre (IFSC) Banking Unit at GIFT City, its first international branch, to expand its international banking operations.
Following the RBI’s repo rate cut, State Bank of India (SBI) had also reduced its External Benchmark-based Lending Rate (EBLR) and RLLR on various loans, resulting in lower EMIs for borrowers. However, SBI’s marginal cost-based lending rates (MCLR), Base rate, and Benchmark Prime Lending Rate (BPLR) remain unchanged.
This reduction in rates is expected to benefit borrowers, particularly those who take out loans to purchase homes or vehicles. The move is also seen as a positive step towards stimulating economic growth, which has been slow in recent times. The RBI’s decision to cut the repo rate and the subsequent reduction in lending rates by banks are expected to have a cascading effect on the economy, leading to increased liquidity and reduced borrowing costs for individuals and businesses.