Good news! These two public sector banks have made loans cheaper, reducing interest rates by this much after the RBI cut the repo rate.:

News Topical, Digital Desk : Within hours of the Reserve Bank of India (RBI) announcing a six-month cut in its key policy rate (repo rate) on Friday, two major public sector banks—Bank of Baroda and Bank of India—reduced their interest rates on repo-linked loans by 25 basis points (0.25%), effective immediately. This move signals that other banks will soon follow suit in providing cheaper loans to consumers.

New rates implemented by major banks

According to PTI news, Bank of India has reduced its Repo Linked Lending Rate (RBLR) from 8.35% to 8.10%. This new rate has come into effect from Friday. Similarly, Bank of Baroda has announced a reduction in its Baroda Repo Linked Lending Rate (BRLLR) from 8.15% to 7.90%. This reduction will be effective from December 6. Earlier this week, Indian Bank also reduced its Marginal Cost of Funds Based Lending Rate (MCLR) by 5 basis points to 8.80%, which is effective from December 3.

RBI's big decision: 'Goldilocks' support to the economy

On Friday, in its monetary policy review, the RBI reduced the benchmark repo rate by 25 basis points to 5.25% for the first time in six months. The RBI also decided to inject additional liquidity of Rs 1 lakh crore into the banking system, aimed at strengthening the "Goldilocks" (balanced and stable growth) economy. The six-member MPC, headed by RBI Governor Sanjay Malhotra, took this decision unanimously. The committee maintained its neutral stance, leaving open the possibility of further rate cuts in the future.

The macroeconomic context of the cuts

The RBI's move comes at a time when India is facing global economic pressures, such as the high 50% tariff rate imposed by the US on Indian products. The repo rate cut will boost consumer demand, attract investment, and provide strong support to the government's efforts to reform GST, ease labor regulations, and simplify financial sector regulations.