Several banks have started lowering their loan rates after the Reserve Bank of India (RBI) reduced the repo rate by 0.25% to 6% on Wednesday. This move is expected to make borrowing cheaper for customers.
Indian Bank announced it will reduce its benchmark lending rate (RBLR) to 8.7% from 9.05%, starting from April 11. Punjab National Bank (PNB) also reduced its repo-linked lending rate (RLLR) to 8.85% from 9.1%, effective April 10. Bank of India made a similar change, lowering its RBLR to 8.85% from 9.1%, starting April 9.
The RBI’s decision to cut the repo rate was backed by all members of the monetary policy committee, who also decided to maintain an accommodative policy stance. This means the RBI will continue to keep extra money in the system to support growth.
The repo rate cut is expected to lower loan interest rates. However, it may reduce the profit banks make from lending, as the cost of funds has not decreased at the same rate.
Also Read: Too Soon to Cheer? RBI Repo Rate Cut 2025 Growth Forecast Faces Scrutiny
The key takeaway here is that the repo rate cut will likely help reduce loan rates, making it more affordable for people to borrow money. However, banks might face some challenges in maintaining their profit margins due to slower reductions in funding costs.
