Good News for Bank of Baroda Loan Borrowers: Benefits of RBI Rate Cut Passed On
New Delhi – In a significant move for loan borrowers, Bank of Baroda (BoB) has announced a reduction in its external benchmark-linked lending rates, directly transmitting the recent 25 basis points cut in the repo rate by the Reserve Bank of India (RBI) to its customers. This decision comes just a day after the RBI unveiled its monetary policy adjustment, marking a pivotal moment for retail and Micro, Small, and Medium Enterprises (MSME) customers seeking more affordable credit options.
On April 10, 2025, Bank of Baroda confirmed that the benefits of this rate cut, which lowers the effective policy rate to 6.25%, would be effective immediately for both retail and MSME loan borrowers. This initiative is part of the bank’s broader strategy to support financial inclusion and stimulate economic growth by providing credit at competitive rates.
In detail, the bank’s Overnight Marginal Cost of Funds-Based Lending Rate (MCLR) has now been set at 8.15%, while the One-Year MCLR is pegged at 9%. These adjustments position Bank of Baroda among the industry leaders in competitive lending rates, reinforcing its commitment to making banking services more accessible.
Bank of Baroda emphasized in a statement that this decision is in line with its goal of facilitating credit access at affordable rates for individuals and businesses alike. The bank’s effort to swiftly adapt to the RBI’s monetary policy decision highlights its dedication to supporting economic recovery and enhancing financial stability for its customers.
The repo rate cut was confirmed by RBI Governor Sanjay Malhotra during an announcement that has been highly anticipated in the current economic climate. This marks the first time in five years that the RBI has slashed key interest rates, as previously, they had been on an upward trajectory due to external pressures, including geopolitical tensions stemming from the Russia-Ukraine conflict.
In retrospect, the RBI had last reduced the repo rate significantly by 40 basis points in May 2020, in response to the economic fallout from the COVID-19 pandemic. After a prolonged period of rate increases starting in May 2022, the central bank decided to pause in May 2023, creating the backdrop for this latest reduction.
As borrowers react to this positive change, it is expected that the reductions will lead to decreased monthly payments for loans, fostering increased spending and investment among consumers and businesses alike.
For the latest updates on personal finance and banking, stay tuned as we continue to monitor the effects of these changes on the economy.
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