Bank customers are now beginning to benefit directly from the Reserve Bank of India’s (RBI) historic decision to reduce the repo rate from 5.50% to 5.25%. The country’s two leading banks, Bank of India and Indian Bank, have significantly reduced their interest rates with immediate effect. This significant reduction means lower loan EMIs, significantly easing the monthly burden for millions of borrowers. This move raises unprecedented hopes of boosting loan demand in the market and providing significant relief to customers.

BOI Makes Significant Cut in RBLR

Following the RBI’s monetary policy cut, Bank of India has responded immediately and significantly reduced its Repo Based Lending Rate (RBLR) by 25 basis points. The bank’s new rates came into effect on December 5th. The old RBLR rate was 8.35%, which has now been reduced to 8.10%. The bank clarified that this significant change was made due to the RBI’s monetary policy decision.

Bank of India stated that this significant reduction in the RBLR will provide significant relief to customers whose home loans, car loans, or MSME loans are directly linked to the repo rate. The reduction in interest rates directly translates into lower EMIs or faster loan repayments, raising unprecedented hopes of reducing the monthly financial burden for millions of borrowers.

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Indian Bank also gave a significant gift to its customers.

Following the Bank of India, Indian Bank has also taken a positive step for its customers. Indian Bank has also announced a reduction in its Repo-Linked Benchmark Lending Rate (RBLR). The old RBLR rate was 8.20%, which has now been reduced to 7.95%. Indian Bank’s new rates are effective from December 6, 2025. The bank clarified that this reduction is only in accordance with the RBI’s new policy.

Double Relief by Reducing MCLR

In addition to the reduction in RBLR, Indian Bank has also reduced its MCLR (Marginal Cost of Funds Based Lending Rate) by 5 basis points. This additional reduction in MCLR will further reduce interest rates for borrowers whose loans are still linked to MCLR. This double relief will greatly benefit Indian Bank customers.

Strong Impact on the Market

The impressive announcements by these two major banks have raised expectations that more banks may cut interest rates in the future. Lower interest rates will boost loan demand in the market, providing a major boost to key sectors like real estate and automobiles, and providing significant financial relief to ordinary customers.

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