BoB, BoI cut repo-linked rates after RBI policy move

State-owned banks have moved swiftly to pass on the benefits of the Reserve Bank of India’s (RBI) latest policy easing to borrowers. Hours after the central bank cut the benchmark repo rate by 25 basis points, Bank of Baroda (BoB) and Bank of India (BoI) on Friday announced reductions in their repo-linked lending rates, signalling the start of a broader easing cycle across the banking sector.According to information,Bank of India (BoI), in a regulatory filing, said it has revised its Repo Based Lending Rate (RBLR) to 8.10% from 8.35%, effective immediately. Bank of Baroda (BoB), in a separate filing, announced that its Baroda Repo Linked Lending Rate (BRLLR) will be reduced to 7.90% from 8.15%, with the new rate coming into effect from December 6.
The latest cuts follow Indian Bank’s move earlier this week, when it trimmed its one-year Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points to 8.80%, effective December 3. Market participants expect several other lenders both public and private to announce similar rate reductions in the coming days.The rate actions come in the backdrop of the RBI’s first interest-rate cut in six months. The Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, voted unanimously to lower the repo rate to 5.25%, while maintaining a neutral stance to preserve flexibility for future policy moves. Alongside the rate cut, the RBI also announced a ₹1-lakh-crore liquidity infusion to bolster credit flow and support what it described as a “goldilocks” phase for the Indian economy.
The central bank’s decision is widely seen as a counter-measure to cushion the domestic economy from external pressures, including the recently imposed 50% tariff by U.S. President Donald Trump on Indian goods, which has raised concerns over export competitiveness and growth momentum. The RBI’s move is also expected to complement the government’s broader reform agenda ranging from GST rationalisation to labour-market easing and financial-sector reforms.A repo rate cut typically leads to lower borrowing costs across the economy, as banks face reduced interest expenses when borrowing from the RBI. This, in turn, enables them to lower lending rates such as MCLR, base rates, and repo-linked benchmarks. As lending rates decline, EMIs on home, auto, and business loans become more affordable, boosting consumption and investment.According to experts, the immediate transmission by major public-sector banks sets the tone for a more accommodative credit environment ahead, which could help revive demand and strengthen economic activity in the coming quarters.

(Business Correspondent)