Did PNB, Bank of India, and UCO Bank Reduce Lending Rates After RBI Repo Cut?
Click to start listening
Synopsis
In a significant move, major banks like PNB, Bank of India, and UCO Bank have slashed lending rates following RBI's repo rate cut. This decision aims to boost economic growth by making loans more affordable for consumers and businesses alike. Discover how this impacts borrowing costs across various loan types and the economic implications.
Key Takeaways
- Punjab National Bank cuts lending rate from 8.85% to 8.35%.
- Bank of India follows suit with similar reductions.
- UCO Bank adjusts MCLR by 10 basis points.
- The RBI's repo rate cut aims to stimulate economic growth.
- The CRR reduction injects Rs 2.5 lakh crore into the banking system.
Mumbai, June 8 (NationPress) Several prominent banks, including Punjab National Bank (PNB), Bank of India, and UCO Bank, have announced reductions in their lending rates following the Reserve Bank of India's (RBI) recent decision to cut the repo rate by 50 basis points.
This rate adjustment is part of the RBI’s broader strategy aimed at fostering economic growth by making borrowing more accessible for both consumers and businesses.
Punjab National Bank was quick to implement this change, reducing its repo-linked lending rate from 8.85 percent to 8.35 percent.
However, the bank opted to keep its base rate and marginal cost of lending rate (MCLR) unchanged.
Bank of India followed suit, also cutting its repo-based lending rate from 8.85 percent to 8.35 percent, as indicated in its stock exchange filing.
UCO Bank, on the other hand, chose to adjust its MCLR by 10 basis points across all loan tenures. These changes, set to take effect from June 10, will render various loan types—such as home and personal loans—slightly more economical.
The bank decreased its overnight MCLR from 8.25 percent to 8.15 percent, the one-month MCLR from 8.45 percent to 8.35 percent, and the three-month MCLR from 8.6 percent to 8.5 percent.
Furthermore, the six-month and one-year MCLRs have been reduced to 8.8 percent and 9 percent, respectively.
Bank of Baroda also declared a 50 basis point reduction in its repo-linked lending rates for specific loan tenures, contributing to the trend of banks lowering borrowing costs.
These adjustments are a direct response to the RBI’s decision, as announced by the Monetary Policy Committee led by Governor Sanjay Malhotra, to decrease the repo rate—a crucial policy rate at which the RBI lends to commercial banks.
The aim behind this rate reduction is to invigorate the economy by promoting spending and investment through more affordable loans.
In addition to the repo rate cut, the RBI has also lowered the Cash Reserve Ratio (CRR) by 100 basis points, from 4 percent to 3 percent.
This CRR reduction will be implemented in four phases and is anticipated to inject Rs 2.5 lakh crore of liquidity into the banking system.
The CRR represents the portion of bank deposits that must be held with the RBI, and a decrease in this ratio allows banks to lend more effectively.
Point of View
The recent lending rate cuts by banks in response to the RBI's repo rate reduction reflect a proactive approach to stimulate economic activity. By making loans more accessible, these institutions are demonstrating their commitment to supporting both consumers and businesses during challenging economic times. The focus on increased liquidity and lower borrowing costs is a welcome development for the economy.
NationPress
08/06/2025
Frequently Asked Questions
What is the recent change in lending rates by major banks?
Major banks like PNB, Bank of India, and UCO Bank have reduced their lending rates following the RBI's repo rate cut by 50 basis points.
How does the repo rate cut affect borrowers?
The repo rate cut makes loans more affordable, encouraging borrowing and spending, which can stimulate economic growth.
When will the new lending rates take effect?
The new lending rates will be effective from June 10.
What is the impact of the Cash Reserve Ratio (CRR) reduction?
The CRR reduction allows banks to lend more, injecting liquidity into the banking system.
Which banks have announced lending rate cuts?
PNB, Bank of India, UCO Bank, and Bank of Baroda have announced reductions in their lending rates.
