Two PSU Banks Slash Loan Rates After RBI's Repo Rate Cut – Here's How Much Cheaper Loans Will Get

After the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 6%, public sector banks have started passing on the benefits to borrowers. In a prompt response to the monetary policy update, Bank of India and UCO Bank announced cuts in their respective lending rates, making home, car, and personal loans cheaper for both existing and new customers.

🏦 What Has Changed?

On Wednesday, the RBI’s Monetary Policy Committee (MPC) announced a 0.25% reduction in the repo rate, marking the second such cut since February. Following this, two major PSU banks announced interest rate cuts:

• Bank of India lowered its Repo-Based Lending Rate (RBLR) from 9.10% to 8.85%, effective immediately.

• UCO Bank reduced its Repo-Linked Lending Rate (RLLR) to 8.8%, effective from Thursday.

💸 What This Means for You

The rate cuts are expected to directly reduce EMIs on home loans, car loans, and personal loans. Since these loans are often linked to the repo rate through external benchmarks, any cut by RBI usually leads to a corresponding drop in lending rates.

Borrowers can expect:

• Lower monthly EMIs

• Increased loan affordability

• Potential rise in credit demand

📊 More Banks Likely to Follow

With these two major PSU banks setting the tone, it’s widely expected that other banks may also announce rate reductions in the coming days. This could trigger a broader easing of credit conditions across the banking sector.

🌍 Why Did RBI Cut the Repo Rate?

The RBI’s decision comes amid rising global economic pressures, especially due to trade uncertainties like the ongoing Trump Tariff War. The aim is to stimulate the Indian economy by encouraging spending and investment through easier access to credit.

This is the second consecutive 25 bps rate cut since February 2025. With the repo rate now at 6%, the central bank is clearly prioritizing growth over inflation.

🧠 Bottom Line

If you're planning to take a loan or already have one linked to repo rates, this is good news. Your borrowing costs are likely to go down — and if you’ve been considering a big-ticket purchase or a home loan, now may be the right time.