Lower EMIs ahead: Canara, Union Bank & IOB reduce rates by 50 bps

Canara Bank, Union Bank of India, and Indian Overseas Bank have slashed their lending rates by 50 basis points (bps) following the RBI's policy rate cut, offering borrowers potential savings.

In a move that brings relief for borrowers, three major public sector banks, Canara Bank, Union Bank of India, and Indian Overseas Bank (IOB) have reduced their external benchmark lending rates (EBLR) by 50 basis points (bps). This development follows the Reserve Bank of India’s (RBI’s) policy rate cut announced last Friday.

 

What’s changed?

• Canara Bank and Union Bank’s repo-linked lending rate (RLLR) stands at 8.25 per cent 
• Indian Overseas Bank’s RLLR is now 8.35 per cent

These rates apply to retail loans (like home, vehicle, and personal loans) and loans to the micro, small and medium enterprises (MSME) sector, which are directly linked to external benchmarks.

 

When do the new rates apply?

• Union Bank implemented the revised rates from June 11. 
• Canara Bank and IOB will apply the new rates from June 12.

How borrowers benefit

According to a statement from Canara Bank, this rate cut will reduce borrowing costs for customers whose loans are linked to the RLLR. Depending on the terms of the loan:

 

Borrowers may see a lower EMI (equated monthly instalment), or

 

The loan tenure may reduce, if the EMI amount remains unchanged.

 

Union Bank of India said that the rate revision fully aligns its EBLR and RLLR with the latest RBI move, benefiting both new and existing borrowers in the retail and MSME segments.

 

Why this matters

Under the current system, many banks have linked retail and MSME loans to external benchmarks, primarily the RBI’s repo rate. When the RBI adjusts its rate, these lending rates move accordingly.