Bank of Baroda, HDFC Bank Reduce Interest Rates on Loans

New Delhi, June 8: The RBI’s surprise 50-basis-point repo rate cut has started to take effect. Major Indian banks have responded by announcing cuts in their respective lending rates, aiming to pass on the benefits of lower borrowing costs to consumers and businesses.

The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. It helps control inflation and manage liquidity in the economy.

Bank of Baroda Slashes RLLR by 50 bps

The State-owned Bank of Baroda (BoB) has reduced its Repo Linked Lending Rate (RLLR) by 50 basis points, in line with the RBI’s latest repo rate cut. Effective June 7, BoB’s RLLR now stands at 8.15 per cent. The move is expected to offer significant relief to borrowers whose loans are directly tied to the repo rate.

HDFC Bank Lowers MCLR Across Tenures

HDFC Bank, one of India’s leading private sector lenders, has also adjusted its Marginal Cost of Funds-based Lending Rate (MCLR) by 10 basis points across all tenures. The revised rates, effective June 7, are as follows:

• Overnight and one-month MCLR: Reduced to 8.90%
• Three-month MCLR: Down to 8.95%
• Six-month and one-year MCLR: Revised to 9.05%
• Two-year and three-year MCLR: Brought down from 9.20% to 9.10%

These reductions are expected to provide moderate relief for borrowers with loans linked to the MCLR benchmark.

Share Price Effect

The shares of Bank of Baroda opened higher at ₹249.55, up by 1.32% or ₹3.25. On the other hand, the shares of HDFC Bank also opened slightly higher at ₹1,981, up by 0.12% or ₹2.30.

RBI’s Bold Moves to Spur Growth

The RBI’s Monetary Policy Committee, led by Governor Sanjay Malhotra, voted 5-1 in favour of slashing the repo rate by 50 bps, while also announcing an unexpected 100 basis points cut in the Cash Reserve Ratio (CRR), now at 3 per cent. This CRR cut injects approximately ₹2.5 lakh crore of additional liquidity into the banking system.

With this latest move, the central bank has now lowered interest rates by 100 basis points in 2025, following earlier cuts of 25 bps each in February and April — the first rate reductions since May 2020.

What’s Ahead?

With the RBI taking an aggressive step to cut interest rates and ease liquidity, the focus now shifts to how quickly banks transmit the benefits to borrowers. While big lenders like BoB and HDFC Bank have already lowered rates, others are expected to follow. This can boost demand for home loans, car loans, and business credit, especially in the upcoming festive season.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations