Bank of Baroda cuts loan rates after RBI move

Mumbai

Bank of Baroda has quickly passed on the Reserve Bank of India’s (RBI) recent rate cut to its retail and MSME (Micro, Small, and Medium Enterprises) customers. The bank announced on Thursday that it has reduced its external benchmark-linked lending rates, making loans cheaper for individuals and small businesses.

This decision follows the RBI's policy rate cut of 25 basis points, bringing the repo rate down from 6.25% to 6%. RBI Governor Sanjay Malhotra said the move aims to boost economic growth by making borrowing easier. The central bank also shifted its policy stance from neutral to accommodative, signaling more support for growth in the coming months.

Bank of Baroda’s current overnight MCLR stands at 8.15%, and the one-year MCLR is 9%, which the bank says are among the most competitive rates in the industry. These changes will help support financial inclusion and improve access to credit.

The RBI hopes that lower rates will encourage both consumers and businesses to borrow more, increasing spending and investment. However, experts say the real impact depends on how fast banks transfer the benefits to borrowers.

According to an SBI report, many public sector banks have already started lowering rates. While public banks cut deposit rates after the February repo rate drop, private banks increased theirs slightly. Overall, the report shows that public sector and scheduled commercial banks are responding well to RBI’s changes.