Union Bank of India, IOB cut lending rate by 50 bps

Two state-owned lenders, Union Bank of India and Indian Overseas Bank (IOB), on Wednesday slashed lending rates by 50 basis points in line with the rate moderation done by RBI last week.

These changes include downward revision of External Benchmark Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) by 50 basis points, the Union Bank said in a statement.

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, it said.

Asset Liability Management Committee (ALCO) in its meeting held on Wednesday has approved a reduction of Repo Linked Lending Rate (RLLR) by 50 basis points from 8.85 per cent to 8.35 per cent effective Thursday, IOB said in a statement.

Following the RBI action, many banks have slashed lending rate remaining will follow suit soon.

The RBI last week cut interest rates by a larger-than-expected 50 basis points, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy.

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 ₹2.5 lakh crore to already surplus liquidity in the banking system.