PNB, BoB, other banks cut lending rates after RBI’s surprise 50 bps repo slash
New Delhi: A host of public sector banks — Punjab National Bank (PNB), Bank of Baroda, UCO Bank, and Bank of India — along with private lender Karur Vysya Bank, have cut lending rates following the Reserve Bank of India’s unexpected 50 basis point (bps) repo rate reduction last week, according to a Business Standard report.
The Monetary Policy Committee (MPC) surprised markets by slashing the repo rate to 5.5%, against forecasts of a smaller 25 bps cut. This marks the third cut in 2025, taking the cumulative reduction to 100 bps so far this year.
Repo-linked rate revisions:
PNB revised its repo-linked lending rate (RLLR) from 8.85% to 8.35%, effective 9 June, but left its MCLR unchanged.
Bank of Baroda lowered its RLLR by 50 bps to 8.15%, effective 7 June.
Bank of India brought down its Repo-Based Lending Rate (RBLR) to 8.35%, with effect from 6 June.
UCO Bank slashes both repo and MCLR rates:
UCO Bank implemented a 10 bps cut across all MCLR tenures from 10 June, alongside a 50 bps reduction in its repo-linked rate to 8.30%, effective 9 June.
New MCLR structure:
Overnight: 8.15%
1-month: 8.35%
3-month: 8.50%
6-month: 8.80%
1-year: 9.00%
Karur Vysya Bank, a private sector lender, cut its 1-year MCLR by 20 bps to 9.80%, and 6-month MCLR by 10 bps. Other maturities remain unchanged. These took effect on 7 June.
RBI moves to quicken rate transmission:
The central bank also trimmed the Cash Reserve Ratio (CRR) by 100 bps in phases, bringing it to 3% of net demand and time liabilities — a level seen only during abnormal economic conditions. This move aims to boost liquidity and accelerate the pass-through of policy rate changes to borrowers and savers.
In a key signal, the RBI also shifted its stance from “accommodative” to “neutral”, hinting that the space for further rate cuts may be limited unless the macroeconomic environment shifts again.
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