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Economic Times
10 hours ago
- Business
- Economic Times
Home loan EMIs continue to fall: 7 banks cut home loan interest rates after RBI repo rate cut in June
Synopsis Following the Reserve Bank of India's repo rate cut in June 2025, several major banks, including SBI, Union Bank, and Bank of Baroda, have reduced their lending rates. This move lowers home loan interest rates for borrowers with floating rate loans linked to the repo rate. Several major banks have reduced their External Benchmark Lending Rates (EBLR) or Repo Linked Lending Rates (RLLR) following the Reserve Bank of India's 50 basis point (0.50%) repo rate cut in June 2025. This translates into lower home loan interest rates for borrowers who have taken or are planning to take floating rate loans which are linked to repo rate. ADVERTISEMENT RBI's repo rate actions have a direct impact on home loan interest rates that follow Repo Linked Lending Rates (RLL The RBI has cut the repo rate by 50 basis points, totalling a 100-basis-point drop in 2025. What does this mean for home loan borrowers? Should you reduce your EMI or your tenure? This video breaks down both choices with real numbers, revealing how you could save up to ₹35 lakh. It's a must-watch before you make a decision. R), an external benchmark linked rate which is linked to repo rate. A lower repo rate translates into a lower RLLR, which means that consumers will pay less in interest over the course of the loan term and have fewer EMIs (equivalent monthly installments) if they continue to pay existing EMIs despite a rate cut. If borrowers want to go lower EMIs then they can keep the tenure same and pay a lower EMI. However, borrowers should note that lower EMI will be applicable only on the reset date of the loan tenure which is usually once in three months. Also read: Public vs private banks: Which of these offers the cheapest home loans now after RBI's 50 bps repo rate cut? Here are banks that have cut their Repo-linked lending rate after the RBI rate cut in June. 1. Indian Overseas Bank Indian Overseas Bank has announced the reduction of Repo Linked Lending Rate (RLLR) by 50 basis points from 8.85% to 8.35%, effective from June 12, 2025. ADVERTISEMENT The State Bank of India (SBI) has revised its Repo Linked Lending Rate (RLLR) with effect from June 15, 2025, in response to the RBI's recent 50 basis point (0.50%) cut in the repo rate. The latest RLLR: 7.75% + Credit Risk Premium (CRP), according to the SBI website. Earlier RLLR: 8.25% + Credit Risk Premium (CRP). ADVERTISEMENT The Union Bank of India has reduced both the External Benchmark Lending Rate (EBLR) and the Repo Linked Lending Rate (RLLR) by 50 basis points, bringing its EBLR down to 8.25% (comprising the new repo rate of 5.50% plus a spread of 2.75%).According to a press release from the bank, 'Following the Reserve Bank of India's reduction in the policy repo rate by 50 basis points, Union Bank of India has revised its key lending rates w.e.f. 11.06.2025. These changes include downward revision of External Benchmark Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) by 50 basis points. With this move, Union Bank of India has completely aligned its EBLR and RLLR with the recent RBI rate cut which will be beneficial to new and existing Retail (Home, Vehicle, Personal, etc.) and MSME borrowers.' Canara Bank has reduced its Repo Linked Lending Rate (RLLR) from 8.75% to 8.25% for loans tied to the External Benchmark rate. This decision follows the Reserve Bank of India's recent 50 basis point cut in the repo rate from 6.00% to 5.50%, announced during the latest Monetary Policy Committee (MPC) meeting. The revised lending rate will come into effect from June 12, 2025. This move will lower borrowing costs for customers with loans linked to RLLR. ADVERTISEMENT In a regulatory filing, PNB announced that it has revised its Repo Linked Lending Rate (RLLR) from 8.85% to 8.35%, effective June 9, 2025. The new rate reflects the 50 basis point cut in the repo rate and includes a Bank Spread of 20 basis points.'The Exchange is hereby informed that consequent upon the decrease in Repo rate by RBI on 06.06.2025, the Bank has revised RLLR from 8.85% (including BSP of 20bps) to 8.35% (including BSP of 20bps) with effect from 09.06.2025,' PNB stated in its filing. ADVERTISEMENT 6. Bank of Baroda (BoB) home loan ratesBank of Baroda, in compliance with SEBI's disclosure norms, informed the exchanges that it has reduced its Baroda Repo Based Lending Rate (BRLLR) from 8.65% to 8.15%, effective June 7, 2025. This is also a 50 basis point reduction, in line with the RBI's move. 'Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that BRLLR has been revised from 8.65% to 8.15% with effect from 07.06.2025,' the bank said. 7. Bank of India home loan rates Bank of India has also joined the rate-cut bandwagon, reducing its Repo Based Lending Rate (RBLR) from 8.85% to 8.35%, effective June 6, 2025. The bank in a BSE announcement stated, 'Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that Repo Based Lending Rate (RBLR) has been changed w.e.f. 06.06.2025. 2. Today, RBI has revised the Repo Rate from 6.00% to 5.50% (decrease of 50 bps).The change in RBLR is as under. The effective RBLR is revised from 8.85% to 8.35%, down by 50 bps.' Bank Old Rate New Rate Effective Date Indian Overseas Bank 8.85% 8.35% 12-Jun-25 State Bank of India 8.25% + CRP 7.75% + CRP 15-Jun-25 Union Bank of India 8.75% (approx.) 8.25% (approx.) Jun-25 Canara Bank 8.75% 8.25% 12-Jun-25 Punjab National Bank 8.85% 8.35% 9-Jun-25 Bank of Baroda 8.65% 8.15% 7-Jun-25 Bank of India 8.85% 8.35% 6-Jun-25 ( Originally published on Jun 19, 2025 ) (Catch all the Personal Finance News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to ET Prime and read the ET ePaper online. NEXT STORY
Economic Times
3 days ago
- Business
- Economic Times
Lending yields set to shrink in FY26 as banks play it safe
"The steep cut in repo rate is expected to sharply impact the net interest margins of the banks and Q2FY26 is expected to be the weakest," said Sachin Sachdeva, sector head, financial sector ratings at ICRA. Mumbai banks anticipate lower lending yields this fiscal year. Caution in unsecured loans and slower retail growth contribute. Policy rate cuts also play a role. Analysts predict a yield drop to 8.6%. Net interest margins may contract. Repricing of loans linked to external benchmarks will impact private banks. Deposit repricing lags will further squeeze margins. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Banks are expected to face downward pressure on lending yields in the current fiscal year amid growing caution in the unsecured lending space, a slowdown in high-yield retail loan growth, and lower policy rates. Analysts forecast that the yield on advances could drop by around 50 basis points year on year to 8.6% in the coming months-against a peak of 9.48% in FY24-as banks increasingly shift focus to lower-risk, lower-return assets in response to evolving credit net interest margins (NIMs) are also projected to contract by 20-25 basis points year on year in FY26, they said. "The yield on advances will drop in FY26, as loans linked to the repo rate will be re-priced downward immediately, while those linked to EBLR (external benchmark lending rate) will adjust over the medium term," said Sanjay Agarwal, senior director at CareEdge Ratings "Banks remain cautious about lending to unsecured, high-yielding asset classes. There could be some competition with the slowing credit growth resulting in softening yield on advances," he to data from CareEdge Ratings, private sector banks saw their yield on advances fall from 10.95% in FY24 to 10% by the end of FY25. The rating agency expects this figure to decline further to 9.64% in FY26, highlighting the sector-wide impact of monetary Reserve Bank of India (RBI) had raised the repo rate by 250 basis points through FY23, which was held steady at 6.50% until February 2025. This tightening phase had enabled banks to pass on higher borrowing costs, boosting lending yields. However, with a 100-basis point cut in repo rate in five months, the trend is re-pricing of EBLR-linked loans, especially prevalent in private sector banks, where 86% of the loan book is tied to EBLR, will further weigh on yields. These banks, which also have higher credit-to-deposit (C/D) ratios, are likely to face greater margin pressure compared to their public sector rates fall, a structural lag in deposit repricing is expected to put additional pressure on net interest margins. In a falling interest rate environment, lending rates tend to adjust more quickly than deposit costs, particularly fixed-term deposits, which are typically repriced with a delay of two to four quarters."The steep cut in repo rate is expected to sharply impact the net interest margins of the banks and Q2FY26 is expected to be the weakest," said Sachin Sachdeva, sector head, financial sector ratings at ICRA
Time of India
3 days ago
- Business
- Time of India
Lending yields set to shrink in FY26 as banks play it safe
Mumbai: Banks are expected to face downward pressure on lending yields in the current fiscal year amid growing caution in the unsecured lending space, a slowdown in high-yield retail loan growth, and lower policy rates. Analysts forecast that the yield on advances could drop by around 50 basis points year on year to 8.6% in the coming months-against a peak of 9.48% in FY24-as banks increasingly shift focus to lower-risk, lower-return assets in response to evolving credit conditions. Banks' net interest margins (NIMs) are also projected to contract by 20-25 basis points year on year in FY26, they said. "The yield on advances will drop in FY26, as loans linked to the repo rate will be re-priced downward immediately, while those linked to EBLR (external benchmark lending rate) will adjust over the medium term," said Sanjay Agarwal, senior director at CareEdge Ratings . by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Many Are Watching Tariffs - Few Are Watching What Nvidia Just Launched Seeking Alpha Read Now Undo "Banks remain cautious about lending to unsecured, high-yielding asset classes. There could be some competition with the slowing credit growth resulting in softening yield on advances," he added. Agencies Bonds Corner Powered By Lending yields set to shrink in FY26 as banks play it safe Mumbai banks anticipate lower lending yields this fiscal year. Caution in unsecured loans and slower retail growth contribute. Policy rate cuts also play a role. Analysts predict a yield drop to 8.6%. Net interest margins may contract. Repricing of loans linked to external benchmarks will impact private banks. Deposit repricing lags will further squeeze margins. Jiraaf launches India's first Bond Analyser to decode fixed-income investing Indian bond yields, swap rates ease after dovish comments from RBI chief Banks may go for short-term G-Secs with CRR cut in Sept RBI accepts bids worth Rs 9,296 crore in switch auction Browse all Bonds News with According to data from CareEdge Ratings, private sector banks saw their yield on advances fall from 10.95% in FY24 to 10% by the end of FY25. The rating agency expects this figure to decline further to 9.64% in FY26, highlighting the sector-wide impact of monetary easing. The Reserve Bank of India (RBI) had raised the repo rate by 250 basis points through FY23, which was held steady at 6.50% until February 2025. This tightening phase had enabled banks to pass on higher borrowing costs, boosting lending yields. However, with a 100-basis point cut in repo rate in five months, the trend is reversing. Live Events The re-pricing of EBLR-linked loans, especially prevalent in private sector banks, where 86% of the loan book is tied to EBLR, will further weigh on yields. These banks, which also have higher credit-to-deposit (C/D) ratios, are likely to face greater margin pressure compared to their public sector counterparts. As rates fall, a structural lag in deposit repricing is expected to put additional pressure on net interest margins. In a falling interest rate environment, lending rates tend to adjust more quickly than deposit costs, particularly fixed-term deposits, which are typically repriced with a delay of two to four quarters. "The steep cut in repo rate is expected to sharply impact the net interest margins of the banks and Q2FY26 is expected to be the weakest," said Sachin Sachdeva, sector head, financial sector ratings at ICRA .
Hans India
4 days ago
- Business
- Hans India
SBI cuts lending rate by 50 bps
New Delhi: The country's biggest lender State Bank of India (SBI) has reduced its lending rate by 50 basis points following the Reserve Bank's policy rate cut, making loans cheaper for both existing and new borrowers. With the latest round of reduction, the Repo Linked Lending Rate (RLLR) of SBI would come down by 50 basis points to 7.75 per cent. It has also reduced the External Benchmark Based Lending Rate (EBLR) by similar basis points to 8.15 per cent from 8.65 per cent earlier. The revised rates come into effect from June 15, 2025, according to updated rate information on SBI's website. The rate reduction is in response to the June 6 RBI jumbo rate cut by 50 basis points to support growth, which hit a four-year low of 6.5 per cent in FY25. The RBI's six-member monetary policy committee, headed by Governor Sanjay Malhotra and consisting of three external members, voted five to one to lower the benchmark repurchase or repo rate by 50 basis points to 5.5 per cent. It also cut the cash reserve ratio by 100 basis points to 3 per cent, adding Rs 2.5 lakh crore to already surplus liquidity in the banking system by December this year. Following the RBI action, most of the banks have slashed lending rate remaining will follow suit soon. Besides, SBI also cut deposit rates by 25 basis points across all maturities for fixed deposits up to Rs 3 crore. The new term deposit rates are effective from June 15. With the revision, for fixed deposits, the interest rate on 1-2 year term deposits will be lower by 25 basis points to 6.50 per cent, and deposits having two years to less than 3 years maturity will attract 6.45 per cent as against 6.70 per cent.
New Indian Express
4 days ago
- Business
- New Indian Express
RBI's repo cut: Competition drives rapid loan rate reductions
CHENNAI: Unlike in the past, most leading commercial banks in India have promptly passed on the repo rate cut announced by the Reserve Bank of India (RBI) to their customers, resulting in a much quicker transition. The RBI implemented a 50 basis point (bps) reduction in the repo rate on June 6, lowering it from 6.25% to 5.75%. This move aims to stimulate economic growth by making borrowing more affordable and encouraging investment, particularly in sectors such as housing and micro, small, and medium enterprises (MSMEs). Following the RBI's policy rate cut, the State Bank of India (SBI), the country's largest lender, announced reductions in its lending rates—cutting the Repo Linked Lending Rate (RLLR) by 50 bps to 7.75% and the External Benchmark Based Lending Rate (EBLR) to 8.15%. According to SBI, the revised rates are effective from June 15, 2025, and apply to both new and existing borrowers. SBI's move has influenced other major banks to follow suit. Bank of Maharashtra reduced retail loan rates by up to 50 bps, effective June 10, 2025. HDFC Bank, Canara Bank, and Bank of Baroda also implemented reductions in their Marginal Cost of Funds-Based Lending Rates (MCLR), making loans more affordable for consumers.
