PNB, BoB, UCO cut lending rates after RBI slashes repo rate by 50 bps

After the RBI's surprise 50 bps repo rate cut, major state-run banks including PNB, Bank of Baroda and UCO Bank have reduced lending rates to boost transmission

State-owned Punjab National Bank (PNB), Bank of Baroda (BoB), UCO Bank, Bank of India (BoI), and Karur Vysya Bank have reduced their external benchmark-linked lending rates after the Reserve Bank of India’s (RBI’s) rate-setting committee — the Monetary Policy Committee (MPC) — cut the repo rate by 50 basis points (bps) last week.

 

PNB revised its repo-linked lending rate (RLLR) from 8.85 per cent to 8.35 per cent, with effect from June 9. However, its marginal cost of funds-based lending rate (MCLR) remains unchanged.

 

Similarly, BoB announced a reduction in its RLLR by 50 bps, effective June 7, 2025, to 8.15 per cent.

 

BoI revised the repo-based lending rate by 50 bps to 8.35 per cent, effective from June 6. 

 

Meanwhile, UCO Bank reduced MCLR rates by 10 bps across tenors, effective from June 10. The overnight MCLR has been reduced from 8.25 per cent to 8.15 per cent. The one-month MCLR has been lowered to 8.35 per cent from 8.45 per cent. The three-month MCLR has seen a cut to 8.5 per cent from 8.6 per cent. The six-month MCLR has been reduced to 8.8 per cent, and the one-year rate has been lowered to 9 per cent. The repo-linked rate — UCO Float — has been reduced by 50 bps to 8.30 per cent, effective from June 9. 

 

Private sector lender Karur Vysya Bank also lowered MCLR-linked rates by 20 bps to 9.8 per cent for one year and 10 bps for six months, while the rates remain unchanged for other tenors, effective from June 7.

 

Last week, the MPC of the RBI cut the repo rate by 50 bps to 5.5 per cent, surprising markets that had largely priced in a more modest reduction of 25 bps. The frontloading of the repo rate cut is aimed at faster transmission of the policy rate to lending and deposit rates.

 

Simultaneously, it announced a staggered 100-bps reduction in the cash reserve ratio, bringing it down to 3 per cent of banks’ net demand and time liabilities — a level not seen in normal times. It changed the stance to ‘neutral’ from ‘accommodative’, signalling very little space for further rate cuts going ahead.

 

So far, the RBI’s MPC has cut policy rates by 100 bps — 25 bps in February, 25 bps in April, and 50 bps in June.