India’s Chennai-based Indian Overseas Bank (IOB) has made a decision to reduce its Repo Linked Lending Rate (RLLR) by 25 basis points (bps). The reduction brings the RLLR down from 9.35% to 9.10%. This move is a follow-up to the Reserve Bank of India’s (RBI) recent Monetary Policy Committee (MPC) meeting, where the Repo rate was also reduced by 25 bps from February 5th to 7th, 2025.
The revised RLLR will be effective from February 11th, 2025. This development is likely to have a positive impact on borrowers, particularly in the housing and personal loan segments, as they will benefit from lower interest rates and reduced EMIs. For savers, this may not be as significant, as the yields on fixed deposits and other deposit schemes may not change proportionally.
The RBI’s decision to cut the Repo rate and IOB’s subsequent reduction in RLLR are part of the country’s efforts to stimulate economic growth. The reduction in interest rates is expected to boost consumption and investment, stimulate economic activity, and create jobs.
However, it is essential to note that the reduction in interest rates is not uniform across the board. Borrowers with longer loan tenures or those with lower credit profiles may not benefit from the reduction in RLLR. Additionally, the reduction in interest rates may lead to a decline in the value of savings and fixed deposits. Banking experts believe that borrowers should carefully review their loan options and consider refinancing to take advantage of the lower interest rates.