RBI Repo Rate Cut: The Reserve Bank of India cut the repo rate by 25 basis points after the monetary policy review last week, which has given great relief to millions of loan holders. The direct impact of this decision is immediately visible in the market, as many major banks have announced that to will reduce the interest rates on their loans. From Bank of Baroda to Bank of Maharashtra, five big banks have reduced the rates of their home loans, car loans, and other retail loans, which will reduce the interest burden on customers.
Complete journey of repo rate cut in 2025
The Reserve Bank has reduced the policy rate four times this year in the environment of a continuously growing economy and decreasing inflation. Starting in February 2025, the repo rate was reduced from 6.50 percent to 6.25 percent for the first time after five years. After this, in the April meeting, the rate was again reduced by 25 basis points, and the rate came down to 6 percent. After this, there was a bigger relief than expected in June 2025, when the central bank cut the interest rate by 50 basis points, and the repo rate became 5.50 percent. Another cut was made in the last months of the year, after which the current repo rate came down to 5.25 percent. Experts were already predicting the possibility of these cuts as inflation remained below the controlled range.
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Banks gave immediate benefits to customers
After the repo rate reduction, many banks have announced that to will reduce the rates of their repo-linked loans and MCLR-based loans. This will benefit both new and old borrowers as there will be a direct reduction in EMIs.
Bank of India reduced RBLR
The impact of the reduction in the repo rate was first seen from the Bank of India. The bank has reduced the repo-linked benchmark lending rate by 25 basis points. After this, the rate reduced from 8.35 percent to 8.10 percent, and the new rates have been implemented since December 5.
Indian Bank reduced both RBLR and MCLR
Indian Bank has also changed its repo-linked rates. The bank has reduced the RBLR from 8.20 percent to 7.95 percent. Along with this, a reduction of 5 basis points has also been implemented in MCLR. The new rates are effective from December 6, making various categories of loans even cheaper.
Bank of Baroda cuts repo-based rates
Bank of Baroda also responded immediately following the RBI decision and announced a 25 basis point cut in the repo-based lending rate. After this, the rate reduced from 8.15 percent to 7.90 percent. These new rates have been implemented since December 6.
Karur Vysya Bank reduced MCLR
Private sector Karur Vysya Bank has also reduced the MCLR for all its tenure loans by 10 basis points. Now the new MCLR rate of the bank has reduced from 9.55 percent to 9.45 percent, and this change has come into effect from December 7.
Bank of Maharashtra made retail loans cheaper
Bank of Maharashtra has also made its repo-linked loans cheaper in line with the repo rate cut. The bank has announced a reduction of 25 basis points in the starting rate of home loans at 7.10 percent and the starting rate of car loans at 7.45 percent. The new rates have come into effect from December 6.