Major banks follow suit by lowering loan interest rates as RBI reduces repo rate; SBI, PNB, Canara Bank, IOB follow suit
The reduction in repo rate by 25 basis points by the Reserve Bank of India resulted in major state-run lenders cutting their loan rates, making borrowing easier and EMIs lower for some sections of people
Banks Act Promptly to Pass-Through RBI Repo Rate Reduction to Borrowers
After the Reserve Bank of India’s statement about lowering the repo rate to help economic growth, many commercial banks have taken immediate action to adapt their interest rates on their loans. The lowering of interest rates is an indication that the central bank is committed to encouraging the demand for credit by lowering loan rates to make them favorable to consumers. This will enable many to enjoy the benefits of reduced rates in their monthly repayments.
Leading banks like State Bank of India, Punjab National Bank, Canara Bank, and Indian Overseas Bank have decided to lower their respective repo-linked and external benchmark lending rates. The above cut in rates is applicable for various types of loans like housing, personal, as well as MSME loans that are directly indexed to the external benchmarks. Customers with floating rates will get benefited automatically due to this decrease in rates.
The largest lender in India, State Bank of India, has reduced its External Benchmark Lending Rate and Repo Linked Lending Rate by 25 basis points. This has been done in sync with the reduction in repo rate. This measure will bring down the borrowing rates in SBI’s vast loan book. Another similar reduction has been made in RLLR by Canara Bank.
The Punjab National Bank has also reduced its loan rates, which will make its repo-linked rate consistent with other major public sector banks. The Indian Overseas Bank has also reduced its loan rates to ensure that its customers benefit directly from the RBI’s monetary easing. Besides these banks, other government lenders have also reduced interest rates in a similar manner.
In fact, this is a clear indication that all is well with regards to the transmission channel, and that the banking sector is more than happy to assist, as it is moving at a good pace to facilitate growth. The good news is that low lending rates should increase borrowing.
