Repo Rate Cut: A Boon for Borrowers

State-owned banks are reducing lending rates following the RBI's decision to cut the repo rate by 25 basis points. This move is anticipated to lower borrowing costs, stimulate economic activity, and provide a buffer against the economic impact of high US tariffs and reforms in India.

In a significant move to stimulate economic activity, state-owned banks Bank of Baroda and Bank of India have announced a reduction in interest rates on loans tied to the repo rate. This action follows the Reserve Bank of India's decision to cut the key policy rate by 25 basis points.

Bank of India reduced its Repo Based Lending Rate to 8.10 percent from 8.35 percent, effective immediately. Similarly, Bank of Baroda lowered its Baroda Repo Based Lending Rate to 7.90 percent. Indian Bank also trimmed its Marginal Cost of funds-based Lending Rate by 5 basis points earlier this week.

This strategic move by the RBI aims to alleviate borrowing costs, thereby driving consumer and business loans. The rate cut also supports India's economy, providing a counter to the steep 50 percent tariffs imposed by the United States, amid other significant domestic reforms.

(With inputs from agencies.)