Union Bank of India (UBI) announced on Monday announced that it has reduced the External Benchmark Based lending rate (EBLR) to 7.20 per cent. This measure is taken to provide relief to individual, small and medium borrowers in line with benefit of 75 bps repo rate reduction by RBI.

The reduced EBLR will come into effect from April 1 onwards.

“EBLR of 7.20 per cent will be applicable for all floating rate personal or retail loans (housing, auto, etc.) and floating-rate loans to Micro, Small and Medium Enterprises to the customers of Union Bank of India from April 1 onwards,” the bank said in a statement.

The reduction will also be applicable to Andhra Bank and Corporation Bank customers as well.

“The above reduction in rate shall also be applicable to the customers of Andhra Bank and Corporation Bank which shall become part of Union Bank of India w.e.f. 01.04.2020,” the statement added.

Furthermore, customers who have availed loans under External Benchmark based schemes of these two banks shall automatically get the benefit of reduction of interest rate with effect from April 1.

Union Bank of India is not the only bank to slash its repo rate. Previously, State Bank of India and Bank of India has also brought down loan rates for consumers, in line with the RBI’s decision to cut the repo rate.

This reduction comes days after the Reserve Bank of India responded to the coronavirus-induced crisis and slashed the repo rate with 75 basis points, bringing it down to 4.40 per cent from 5.15 per cent. The present repo rate is the lowest since April 2009’s Global Financial Crisis when it hit the lowest point of 4.74%.

Repo rate is the rate at which federal bank lends money to commercial banks in the event of any shortfall of funds. Financial authorities use rate to control the flow of money in the economy, thereby inflation.