Indian Banks Revise Lending Rates Post RBI Repo Rate Cut
Indian banks slash lending rates after RBI reduces repo rate to 6%. Indian Bank, PNB, and Bank of India implement revised RBLR and RLLR.
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Multiple public sector banks revised their external benchmark lending rates following the Reserve Bank of India's decision to lower the repo rate by 25 basis points to 6% on Wednesday.
Indian Bank announced a reduction in its repo-linked benchmark lending rate (RBLR) from 9.05 per cent to 8.7 per cent, with the revised rate effective April 11. Punjab National Bank adjusted its repo-linked lending rate (RLLR) to 8.85%, down from 9.1%, applicable from April 10. Bank of India implemented a similar revision, reducing its RBLR from 9.1 per cent to 8.85 per cent, with effect from April 9.
The Reserve Bank of India's Monetary Policy Committee voted unanimously in favor of the rate cut, alongside a shift in its policy stance to accommodative. The central bank highlighted its intent to maintain surplus liquidity within the banking system.
As per regulatory requirements, all floating rate loans offered by banks must be linked to an external benchmark, commonly the repo rate. This move is anticipated to lower borrowing costs for consumers and businesses.
However, despite the reduction in lending rates, banks may encounter pressure on their net interest margins. The cost of funds has not decreased proportionally, potentially narrowing the spread between interest earned on loans and interest paid on deposits.
