Home, auto loans turn cheaper after RBI cuts policy repo rate by 25 bps

Loans to mid and large corporates are linked to the marginal cost of funds based lending rate or MCLR which is yet to come down

Public-sector banks have started dropping their external benchmark linked lending rate (EBLR), a day after the Reserve Bank of India slashed the policy repo rate by 25 basis points (bps) on Wednesday. Retail loans like auto and home loans, and loans to small businesses are linked to the EBLR. Interestingly, Chennai-based Indian Bank cut their EBLR by 35 bps, while Punjab National Bank, UCO Bank, Bank of Baroda, and Bank of India’s reduction was in line with rate cut. 

Loans to mid and large corporates are linked to the marginal cost of funds based lending rate or MCLR which is