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Banks Revise Lending Rates Following RBI’s Repo Rate Cut

After the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points on February 7, 2025, several banks have started adjusting their Marginal Cost of Funds-Based Lending Rate (MCLR) and Repo-Linked Lending Rate (RLLR). Leading financial institutions such as HDFC Bank, Canara Bank, and others have announced changes in their lending rates. MCLR and RLLR Revisions Across Banks Following the bi-monthly monetary policy meeting, banks have implemented rate adjustments affecting different loan tenures: HDFC Bank increased its overnight MCLR by 5 basis points (bps), raising it from 9.15% to 9.20%, effective February 7, 2025. Other tenures remain unchanged. Canara Bank lowered its one-month MCLR by 10 bps, effective February 12, 2025. UCO Bank raised its one-year MCLR by 5 bps, effective February 10, 2025, while simultaneously reducing its RLLR to align with the repo rate cut. Punjab National Bank (PNB) reduced its RLLR by 25 bps to 9%, whereas Bank of Baroda lowered its Baroda RLLR to 8.9%. Other banks, including Bank of India, Indian Bank, and Karur Vysya Bank, also announced RLLR reductions following the repo rate adjustment. Impact on Home Loan Borrowers For homebuyers with loans linked to MCLR, these rate changes could directly impact their Equated Monthly Installments (EMIs): An increase in MCLR will result in higher monthly EMIs. A decrease in MCLR or RLLR will lower home loan interest rates, reducing the financial burden for borrowers. With multiple banks adjusting their lending rates, homebuyers and borrowers are advised to review their loan agreements to understand the impact of these changes on their loan repayment obligations.