RBI Rate Cut: Bank of Baroda and HDFC Bank Lower Lending Rates

Following the Reserve Bank of India’s (RBI) recent decision to cut the repo rate by 50 basis points to 5.5%, major banks have responded by reducing their lending rates, providing relief to borrowers.

Bank of Baroda (BoB) has lowered its Repo Linked Lending Rate (RLLR) by 50 basis points, bringing it down to 8.15% effective June 7. This move fully passes on the RBI’s rate cut to customers, making loans linked to the repo rate more affordable for both new and existing borrowers124.

HDFC Bank has also announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR) by 10 basis points across all major tenures. The new rates, effective from June 7, are as follows: overnight and one-month MCLR at 8.90%, three-month at 8.95%, and six-month and one-year MCLR at 9.05%. Two-year and three-year MCLR now stand at 9.10%136.

These adjustments are expected to lower EMIs on home loans, personal loans, and other credit products, giving borrowers some financial relief amid rising living costs. However, depositors should be aware that fixed deposit rates may also come down in the near future as banks adjust to the new policy environment15.

The RBI’s rate cut, along with a reduction in the cash reserve ratio, aims to boost lending and stimulate economic activity by increasing liquidity in the banking system12