Canara and Indian Bank slash rates: Here’s what’s changing for their customers

Leading public sector lenders Canara Bank and Indian Bank on Thursday announced a reduction of 25 basis points in their repo-linked lending rates (RLLR), making home and vehicle loans more affordable for borrowers.

The move follows the Reserve Bank of India’s (RBI) recent decision to cut the key policy repo rate by 25 basis points for the second consecutive time to 6%.

Indian Bank said its home loan interest rates have been revised down to 7.90% from the earlier 8.15%, while vehicle loan rates have been reduced to 8.25% from 8.50%. The Chennai-based lender is also offering additional customer benefits, including discounted processing fees and zero documentation charges.

Canara Bank, in a separate statement, said the reduction in RLLR has led to a corresponding decrease in its lending rates across loan categories. After the revision, its housing loans start at 7.90% and vehicle loans at 8.20% per annum.

The transmission of the RBI’s rate cut has triggered similar actions across the banking sector.

Last week, State Bank of India (SBI), the country's largest lender, slashed its RLLR by 25 basis points to 8.25% and revised its External Benchmark Based Lending Rate (EBLR) to 8.65%, effective April 15.

SBI simultaneously cut fixed deposit (FD) rates by 10 to 25 basis points across various tenures, with deposits maturing in one to two years now fetching 6.70%, down from 6.80%.

Bank of India lowered its home loan rate by 25 basis points to 7.90% and withdrew its 400-day special deposit scheme. HDFC Bank reduced savings account interest rates by 25 basis points, while Punjab National Bank (PNB), UCO Bank, and Bank of Baroda (BoB) have also aligned their lending rates with the RBI’s policy direction.

BoB reduced its external benchmark-linked lending rates by 25 basis points but kept its Marginal Cost of Funds-Based Lending Rate (MCLR) unchanged at 9%. PNB lowered its RLLR from 9.10% to 8.85%, and Indian Bank also brought down its Repo Based Lending Rate (RBLR) to 8.70% from 9.05%.

The RBI’s Monetary Policy Committee, in a unanimous vote, shifted its policy stance from “neutral” to “accommodative,” indicating scope for further rate easing to support growth.