Public sector banks became the first to act on the RBI’s policy signal by promptly cutting their Repo Linked Lending Rates (RLLR).

Bank of Baroda lowered its RLLR from 8.65% to 8.15%, effective June 7. Punjab National Bank and Bank of India both reduced their RLLRs from 8.85% to 8.35%, with PNB’s rate cut effective June 9 and Bank of India’s from June 6.

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Indian Bank cut its RLLR from 8.70% to 8.20%, while UCO Bank reduced its RLLR from 8.80% to 8.30%, both effective June 6 and June 9 respectively. Canara Bank also revised its repo-linked lending rate to 7.75%.

In addition, UCO Bank announced a 10-basis point reduction across all tenors of its Marginal Cost of Funds-based Lending Rate (MCLR), offering relief to corporate and SME borrowers.

In contrast, private sector banks have taken a more measured approach. While they welcomed the rate cut, several of them noted the need to assess the impact on deposits and liquidity before implementing widespread reductions.

However, some banks initiated partial rate transmission through adjustments in MCLR.

HDFC Bank reduced its MCLR by 10 basis points, with new rates ranging between 8.90 and 9.05% for tenors up to one year, effective June 7. Karur Vysya Bank also revised its MCLR, bringing down the 6-month tenor from 9.20% to 9.10%, and the 1-year tenor from 9.40% to 9.20%, both changes effective June 8.

For retail borrowers, particularly home loan customers linked to the repo rate, the 50-bps rate cut is expected to offer meaningful EMI relief. For instance, a 20-year home loan of Rs 50 lakh could see a monthly saving of Rs 1,500 to Rs 2,000.

Corporate borrowers and MSMEs stand to benefit from reduced working capital costs as banks increasingly shift large-ticket loans to external benchmark-linked rates, ensuring faster transmission of RBI policy changes.