The Reserve Bank of India’s (RBI) recent repo rate cut has triggered a wave of interest rate reductions across major government banks, making borrowing more affordable for consumers. With the repo rate lowered by 25 basis points (bps) to 6.25% on February 7, 2025, banks have responded by adjusting their lending rates, particularly for home, car, education, and personal loans.
BANK OF MAHARASHTRA (BoM)
Bank of Maharashtra has cut retail loan rates by 25 bps, making home loans and car loans cheaper.
- Home loans are now available at a starting rate of 8.10% per annum.
- Car loans start at 8.45% per annum.
- Education loans and other loans linked to the Repo Linked Lending Rate (RLLR) have also been reduced by 25 bps.
- Additionally, the bank has waived processing fees on home and car loans, offering further financial relief to borrowers.
STATE BANK OF INDIA (SBI)
India’s largest public sector lender, State Bank of India (SBI), has also slashed its lending rates following the RBI’s move.
- Home loans are now available at 8.25%, down 25 bps from the previous rate.
- Depending on the borrower’s credit score, home loan rates now range from 8.25% to 9.2%.
- Loans against property are available at 9.75% to 11.05%.
- Car loans now range between 9.2% and 10.15% per annum.
PUNJAB NATIONAL BANK (PNB)
Punjab National Bank (PNB) has also revised its loan interest rates to align with the new repo rate.
- Car loans start at 8.50% per annum.
- Education loans (PNB Digi Education Loan) start at 7.85% per annum, making student financing more accessible.
WHY THE RATE CUT?
The repo rate is the interest rate at which banks borrow money from the RBI. A reduction in the repo rate lowers the cost of borrowing for banks, allowing them to offer cheaper loans to consumers.
This is the first repo rate cut in five years, aimed at boosting economic growth and increasing consumer spending. Lower interest rates encourage higher demand for home loans, car loans, and business loans, stimulating key sectors like real estate and automobile industries.
For borrowers, this means cheaper EMIs and better affordability, making it an ideal time to take advantage of lower lending rates before they potentially rise again.
