The RBI repo rate cut is making headlines this week, as top Indian banks pass on the benefits to borrowers, causing a noticeable rise in their share prices.
In a move to support the economy, the Reserve Bank of India (RBI) recently reduced the repo rate by 25 basis points (bps) to 6%. This decision was taken unanimously by the RBI’s Monetary Policy Committee (MPC) last week. The repo rate is the rate at which RBI lends money to commercial banks, and a reduction usually leads to lower borrowing costs for consumers.
Soon after the announcement, major banks like State Bank of India (SBI), HDFC Bank, and Bank of India responded by cutting their lending and deposit rates. Investors welcomed the move, and the stock prices of these banks climbed on the National Stock Exchange (NSE).
SBI Cuts Interest Rates and Boosts Market Confidence
SBI, India’s largest public sector bank, quickly reacted to the RBI repo rate cut. It reduced its Repo Linked Lending Rate (RLLR) by 25 bps to 8.25%, and its External Benchmark Based Lending Rate (EBLR) also came down to 8.65%.
These new rates took effect on April 15, 2025, making loans cheaper for both new and existing customers.
SBI also reduced interest rates on fixed deposits (FDs). For FDs up to ₹3 crore:
- 1–2 year deposits now earn 6.7% interest (down 10 bps)
- 2–3 year deposits now earn 6.9% (down from 7%)
For FDs above ₹3 crore:
- 180–210 days: 6.40% (down 20 bps)
- 211–364 days: 6.50% (down 25 bps)
Following this announcement, SBI’s stock rose 2.07% to ₹769.45 per share on the NSE.
HDFC Bank Lowers Savings Account Rates
HDFC Bank also joined in, reducing interest on savings accounts by 25 bps. Now:
- Savings below ₹50 lakh earn 2.75%
- Above ₹50 lakh, the rate is 3.25% (earlier 3.5%)
Despite the lower deposit returns, HDFC’s move was seen as a signal of stronger credit activity. As a result, its shares rose nearly 3.87%, peaking at ₹1,876.8 before settling at ₹1,869.8.
Bank of India Slashes Home and Retail Loan Rates
Bank of India, headquartered in Mumbai, also trimmed its home loan rates by 25 bps, bringing the rate down to 7.9% per annum (based on credit score). It also applied the rate cut to other products:
- Vehicle loans
- Personal loans
- Education loans
- Loans against property
The Bank of India’s share price climbed 1.66% to ₹109.96 after the rate revision.
Also Read: Loan Rates Just Got Cheaper! Learn How the RBI’s Repo Rate Cut Affects You!
Why the RBI Repo Rate Cut Matters to You
This repo rate cut is good news if you’re planning to take a loan or refinance an existing one. It reduces your equated monthly installments (EMIs) and boosts affordability.
However, depositors might find lower returns on savings and fixed deposits. That said, the broader market sees this move as a positive step to spur consumption and credit growth.
The RBI’s goal is to balance inflation control while supporting economic recovery. If inflation remains in check, we could see more rate cuts in the future.
The RBI repo rate cut is already showing its ripple effects across the banking and stock sectors. Borrowers can expect relief, while investors may continue to benefit from the banking sector’s momentum.
Also Read: RBI’s 25 bps Cut Hits Bank Stocks—Find Out Which Banks Fell the Most!
