New Delhi: Hours after the Reserve Bank of India (RBI) announced a 25 basis points cut in the repo rate, two major public sector banks -- Bank of India and UCO Bank on Wednesday reduced their lending rates, bringing relief to both existing and new borrowers.
The RBI’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, reduced the key policy rate to 6 per cent from 6.25 per cent earlier in the day.
This marks the second consecutive cut under Malhotra’s leadership and is aimed at supporting economic growth amid rising global challenges, including a steep 26 per cent tariff by the US on Indian exports.
Reacting swiftly to the RBI's move, Bank of India lowered its Repo Based Lending Rate (RBLR) to 8.85 per cent, down from 9.10 per cent.
The new rate came into effect immediately on April 9.
Similarly, UCO Bank also reduced its repo-linked lending rate to 8.8 per cent, with the revised rate effective from Thursday.
Both banks announced the rate cuts through separate regulatory filings, citing the RBI’s latest policy decision as the reason for the revision.
This move is expected to make loans cheaper, encouraging more borrowing by individuals and businesses.
Experts observed that in the upcoming days, other banks are expected to adopt similar measures, thereby extending the advantages of the Reserve Bank of India’s interest rate reduction to their clients nationwide.
During the announcement of the decision, Governor Malhotra disclosed a change in the policy approach from 'neutral' to 'accommodative.' This suggests that the central bank is prepared to foster economic growth by implementing more lenient monetary policies.
"Our position offers guidance on policy rates but does not include specific directions for managing liquidity," he stated.
The Reserve Bank of India has already injected more than $80 billion into the banking sector in the past two months, accompanied by an interest rate reduction in February — the first such action in half a decade.